A General Equilibrium Analysis of the Economic Impact of a Devaluation on Tourism: The Case of Fiji

Pratt, Stephen (2014) A General Equilibrium Analysis of the Economic Impact of a Devaluation on Tourism: The Case of Fiji. Tourism Economics, 20 (2). pp. 389-405. ISSN 1354-8166

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Abstract

Policymakers often see a currency devaluation as a means of increasing a country's exports, providing a boost to economic activity. In an economy where tourism exports are significant, a devaluation will make tourism more competitive, providing a stimulus to the economy through tourism exports. Imports will be more expensive, which is often seen as an inflationary side-effect of the export stimulus. Results from a computable general equilibrium model of Fiji indicate that, while devaluation will increase tourism consumption, the overall effect on the economy will be contractionary, as household consumption, investment and domestic production will all decrease. Policymakers and central banks need to consider the full economy-wide impacts of a currency devaluation when determining the overall benefit to the economy.

Item Type:	Journal Article
Subjects:	H Social Sciences > H Social Sciences (General)
Divisions:	Faculty of Business and Economics (FBE) > School of Tourism and Hospitality Management
Depositing User:	Stephen Pratt
Date Deposited:	14 Feb 2019 21:30
Last Modified:	14 Feb 2019 21:30
URI:	https://repository.usp.ac.fj/id/eprint/11196

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