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

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.

Bibliographic Details

Main Authors:	Bastos, Fabiano, Angelo Divino, Jose
Language:	English
Published:	2009-09-01
Subjects:	ACCOUNTING, AGGREGATE DEMAND, BANK POLICY, BANKING SECTOR, BASIS POINT, CAPITAL ACCOUNT, CAPITAL ACCOUNTS, CAPITAL BASE, CENTRAL BANK, COMMODITY, COMPETITIVENESS, CONSUMER PRICE INDEX, COVARIANCE MATRIX, CURRENCY, DEPRECIATION, DEVALUATION, DEVALUATIONS, DISTORTIONS, DOMESTIC CAPITAL, DOMESTIC ECONOMY, DOMESTIC MARKETS, DOMESTIC PRICES, DUMMY VARIABLE, DUMMY VARIABLES, ECONOMETRICS, ECONOMIC CRISIS, ECONOMIC DOWNTURN, ECONOMIC ENVIRONMENT, ECONOMIC PERFORMANCE, ECONOMIC SLOWDOWN, EQUILIBRIUM CONDITIONS, EXCHANGE RATE, EXCHANGE RATE DEVALUATION, EXCHANGE RATE DEVALUATIONS, EXCHANGE RATE FLUCTUATIONS, EXCHANGE RATE SHOCKS, EXCHANGE RATES, EXCHANGE-RATE, EXOGENOUS VARIABLE, EXOGENOUS VARIABLES, EXPORT MARKETS, EXPORT PERFORMANCE, EXPORT SECTOR, EXPORTS, EXTERNAL DEMAND, EXTERNAL EQUILIBRIUM, FINANCIAL MARKETS, FISCAL STIMULUS, GDP, GDP DEFLATOR, GDP PER CAPITA, GROWTH POTENTIAL, HUMAN CAPITAL, IMPORT, INFLATION, INFLATION RATE, INFLATIONARY PRESSURE, INFLATIONARY PRESSURES, INFRASTRUCTURE INVESTMENT, INTEREST RATE, INTEREST RATES, INTERNATIONAL BANK, INTERNATIONAL CAPITAL, INTERNATIONAL CAPITAL MARKETS, INTERNATIONAL PRICE, INTERNATIONAL TRADE, LIQUIDITY, MACROECONOMIC MANAGEMENT, MACROECONOMIC POLICY, MACROECONOMIC VARIABLES, MACROECONOMICS, MARKET FORCES, MONETARY ECONOMICS, MONETARY POLICIES, MONETARY POLICY, MONETARY TRANSMISSION, MULTIPLE POLICY, NEGATIVE SHOCKS, NOMINAL DEPRECIATION, NOMINAL EXCHANGE RATE, NOMINAL EXCHANGE RATES, NOMINAL INTEREST RATE, OIL PRICE, OIL PRICES, OPEN ECONOMY, OUTPUT, POLICY RESPONSE, PORTFOLIO, POVERTY REDUCTION, PREFERENTIAL MARKET ACCESS, PRICE LEVELS, PRIVATE SECTOR DEVELOPMENT, PUBLIC SECTOR, REAL EXCHANGE RATE, REAL EXCHANGE RATES, RECESSION, REGULATORY ENVIRONMENT, REJECTIONS, SOCIAL COSTS, STANDARD DEVIATIONS, TRADING, TRADING PARTNERS, TRANSMISSION MECHANISM, VALUE ADDED,
Online Access:	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20090928161216 https://hdl.handle.net/10986/4256
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