• Emmanuel Farhi
  • Gita Gopinath


Fiscal Devaluations. Emmanuel Farhi, Gita Gopinath, August 29, 2013, Paper. "We show that even when the exchange rate cannot be devalued, a small set of conventional fiscal instruments can robustly replicate the real allocations attained under a nominal exchange rate devaluation in a dynamic New Keynesian open economy environment. We perform the analysis under alternative pricing assumptions—producer or local currency pricing, along with nominal wage stickiness; under arbitrary degrees of asset market completeness and for general stochastic sequences of devaluations..."  Link verified March 28, 2014