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Exchange rate policy and devaluation in Malawi:

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  • Pauw, Karl
  • Dorosh, Paul A.
  • Mazunda, John

Abstract

This study demonstrates why devaluation was ultimately necessary in Malawi and also what its eventual impact might be in terms of prices, income distribution, and domestic production. Our approach is to use a computable general equilibrium (CGE) model to evaluate the economywide impacts of foreign exchange shortages in Malawi under two alternative exchange rate regimes. The foreign exchange shortages are modeled by simulating the effect of actual shocks, including tobacco price declines and reductions in direct budgetary support or foreign direct investments. We then evaluate the economy’s response to these shocks under a fixed exchange rate regime and a flexible exchange rate regime.

Suggested Citation

  • Pauw, Karl & Dorosh, Paul A. & Mazunda, John, 2013. "Exchange rate policy and devaluation in Malawi:," IFPRI discussion papers 1253, International Food Policy Research Institute (IFPRI).
  • Handle: RePEc:fpr:ifprid:1253
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    Cited by:

    1. World Bank, 2016. "Malawi Urbanization Review," World Bank Other Operational Studies 24391, The World Bank.
    2. Pauw, Karl & Beck, Ulrik & Mussa, Richard, 2014. "Did rapid smallholder-led agricultural growth fail to reduce rural poverty? Making sense of Malawi's poverty puzzle," WIDER Working Paper Series 123, World Institute for Development Economic Research (UNU-WIDER).
    3. Greenwell Collins Matchaya & Pius Chilonda & Sibusiso Nhelengethwa, 2013. "International Trade and Income in Malawi: A Co-integration and Causality Approach," International Journal of Business and Economic Sciences Applied Research (IJBESAR), Eastern Macedonia and Thrace Institute of Technology (EMATTECH), Kavala, Greece, vol. 6(2), pages 125-147, September.

    More about this item

    Keywords

    exchange rate; Devaluation of currency; foreign exchange rationing; Currencies; Computable General Equilibrium (CGE) model; Economic policy;

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