12,000

We have over 12,000 students, from over 100 countries, within one of the safest campuses in the UK

97%

97% of Lancaster students go into work or further study within six months of graduating

Home > Research > Publications & Outputs > Sri Lanka’s Experiment with Devaluation: VAR an...
View graph of relations

« Back

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

Research output: Contribution to journalJournal article

Published

<mark>Journal publication date</mark>2004
<mark>Journal</mark>International Trade Journal
Issue4
Volume18
Number of pages33
Pages269-301
<mark>Original language</mark>English

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.