Exchange Rate and Output Fluctuations in the Small Open Economy of Mauritius

17 Pages Posted: 20 Apr 2016

Date Written: September 1, 2009

Abstract

The authors estimate a VAR and compute generalized impulse response to analyze the joint dynamics of four key macroeconomic variables in the small open economy of Mauritius. Results suggest that nominal exchange rate and interest rate have limited ability to impact output growth over the medium-run. Large error bands hinder analysis of the inflation output trade-off, but evidence points to a weak relationship in the short run as well. These findings are used to shed some light into the policy response to the current worldwide economic slowdown affecting Mauritius.

Keywords: Debt Markets, Emerging Markets, Economic Stabilization, Currencies and Exchange Rates, Economic Theory & Research

Suggested Citation

Bastos, Fabiano and Divino, Jose Angelo, Exchange Rate and Output Fluctuations in the Small Open Economy of Mauritius (September 1, 2009). World Bank Policy Research Working Paper No. 5065, Available at SSRN: https://ssrn.com/abstract=1484550

Fabiano Bastos

World Bank - Africa ( email )

1818 H Street
Washington, DC 20433
United States

Jose Angelo Divino

Catholic University of Brasilia ( email )

SGAN 916
Office A-118
Brasilia, 70790160
Brazil
+55(61)34487135 (Phone)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
72
Abstract Views
426
rank
406,064
PlumX Metrics