De Silva, Dakshina G. and Zhu, Zhen (2004) Sri Lanka’s Experiment with Devaluation: VAR and ECM Analysis of the Exchange Rate Effects on Trade Balance and GDP. International Trade Journal, 18 (4). pp. 269-301. ISSN 1521-0545
Full text not available from this repository.Abstract
The objective of this study is to empirically analyze the impact of the devaluation of the Sri Lankan currency (rupee) on Sri Lankan trade balance and gross domestic product. The World Bank and the International Monetary Fund (IMF) have been promoting devaluation as a policy tool for economic growth and stability in LDCs. However, there is substantial research supporting the “J-Curve” effect and contractionary effects on economies due to devaluation, especially for less developed countries (LDCs). The results show a contractionary impact on the Sri Lankan output.