02272cas a2200277 a 4500 AALejournalIMF016411 230101c9999 xx r poo 0 0eng d 5.00 USD 9781513512914 1018-5941 BD-DhAAL BD-DhAAL Acevedo Mejia, Sebastian. External Devaluations : Are Small States Different? / Sebastian Acevedo Mejia, Aliona Cebotari, Kevin Greenidge, Geoffrey Keim. Washington, D.C. : International Monetary Fund, 2015. 1 online resource (38 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students 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. Mode of access: Internet Cebotari, Aliona. Greenidge, Kevin. Keim, Geoffrey. IMF Working Papers; Working Paper ; No. 2015/240 Full text available on IMF http://elibrary.imf.org/view/journals/001/2015/240/001.2015.issue-240-en.xml IMF e-Library