=+%+R影+(1-h)g]-5 where is the e ouy's held by residents the rate of growth of foreign demand for its money as a reserve currency,in real terms.This can be rewritten as 熙=[1-A)g+wrR+(h%-元R- -[(1-)8D-1-rm】 If the real forcign demand for the reserve ountry's currency is assumed o be a onstan proportion of the foreign money supply,the expression simplifies to 熙=少uw8+h(%R-乃8-1-5-T-ro] Assuming unitary income-elasticities of demand for real balances everywhere and the same initial ratios of international reserves to domestic money,it simplifies further to 期=殿+色(g,-)-1(m一动. That is,the reserve currency country will gain reserves faster than the rate of growth of otal rves if its real growth rate xed the world averageor itsrate expansion is below the world average,and vice versa. An alternative formulation of the problem,using the same two assumptions for simplicity. 8=h1-r题-即)-(hg,-g1. That is,foreign demand for the reserve currency must grow faster,the larger the reserve currency country's rate of domestic credit expansion relative to the rate of credit expansion aboad and the lower its real rate of growth relative to rate Finally,Iapply the general cass of monetary models of the balance of payments developed above to the problem of the effects of a devaluation of a currency.The application is not entirely theoretically.since the mathematics employed relate where a devaluation isa onceover affair.Still,the results are suggestive. For this problem,retain the assumption that domestic prices must keep in line with foreign prices,rate that can be changed,and represe devaluation by an instantaneous rate of change of the exchange rate.The demand for money now becomes Ma=pp (y,i). where is the foreign price level and is the price of foreign currency in terms of domestic 28