This paper examines the short- and long-run effects of devaluation in a model where, following structuralist theories, investment is treated as output of a composite good produced by combining domestic and imported components in fixed proportions. Introducing investment goods of this type alters a number of results. Most notably, the Marshall-Lerner condition is neither necessary nor sufficient for an expansionary outcome and, under simple and plausible conditions, a devaluation may worsen the payments balance.
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