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

Stephen Pratt
Additional contact information
Stephen Pratt: School of Hotel and Tourism Management, Hong Kong Polytechnic University, 17 Science Museum Road, TST East, Kowloon, Hong Kong

Tourism Economics, 2014, vol. 20, issue 2, 389-405

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.

Keywords: devaluation; tourism consumption; computable general equilibrium model; Fiji (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
https://journals.sagepub.com/doi/10.5367/te.2013.0274 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sae:toueco:v:20:y:2014:i:2:p:389-405

DOI: 10.5367/te.2013.0274

Access Statistics for this article

More articles in Tourism Economics
Bibliographic data for series maintained by SAGE Publications ().