Sri Lanka’s Experiment with Devaluation: VAR and ECM Analysis of the Exchange Rate Effects on Trade Balance and GDP

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

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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.

Item Type: Journal Article
Journal or Publication Title: International Trade Journal
Uncontrolled Keywords: /dk/atira/pure/subjectarea/asjc/1400/1403
Subjects:
Departments: Lancaster University Management School > Economics
ID Code: 52456
Deposited By: ep_importer_pure
Deposited On: 06 Feb 2012 16:30
Refereed?: Yes
Published?: Published
Last Modified: 22 Jun 2019 04:43
URI: https://eprints.lancs.ac.uk/id/eprint/52456

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