External Devaluations : Are Small States Different? /

The paper investigates whether the macroeconomic effects of external devaluations have systematically different effects in small states, which are typically more open and less diversified than larger peers. Through several analytical approaches -- DSGE model, event study, and regression analysis --...

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Bibliographic Details
Main Author: Acevedo Mejia, Sebastian
Other Authors: Cebotari, Aliona, Greenidge, Kevin, Keim, Geoffrey
Format: Journal
Language:English
Published: Washington, D.C. : International Monetary Fund, 2015.
Series:IMF Working Papers; Working Paper ; No. 2015/240
Online Access:Full text available on IMF
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100 1 |a Acevedo Mejia, Sebastian. 
245 1 0 |a External Devaluations :   |b Are Small States Different? /  |c Sebastian Acevedo Mejia, Aliona Cebotari, Kevin Greenidge, Geoffrey Keim. 
264 1 |a Washington, D.C. :  |b International Monetary Fund,  |c 2015. 
300 |a 1 online resource (38 pages) 
490 1 |a IMF Working Papers 
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500 |a <strong>On-Campus Access:</strong> No User ID or Password Required 
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520 3 |a The paper investigates whether the macroeconomic effects of external devaluations have systematically different effects in small states, which are typically more open and less diversified than larger peers. Through several analytical approaches -- DSGE model, event study, and regression analysis -- it finds that the effects of devaluation on growth and external balances are not significantly different between small and large states, with both groups equally likely to experience expansionary or contractionary outcomes. However, the transmission channels are different: devaluations in small states are more likely to affect demand through expenditure compression, rather than expenditure-switching channels. In particular, consumption tends to fall more sharply in small states due to adverse income effects, thereby reducing import demand. Policy conclusions point to the importance of social safety nets, complementary wage and antiinflation policies, investment-boosting reforms, and attention to potential adverse balance sheet effects to ensure positive outcomes. 
538 |a Mode of access: Internet 
700 1 |a Cebotari, Aliona. 
700 1 |a Greenidge, Kevin. 
700 1 |a Keim, Geoffrey. 
830 0 |a IMF Working Papers; Working Paper ;  |v No. 2015/240 
856 4 0 |z Full text available on IMF  |u http://elibrary.imf.org/view/journals/001/2015/240/001.2015.issue-240-en.xml  |z IMF e-Library