Currency devaluation can help boost growth and employment in Bolivia

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Bolivia seems to be heading towards an imminent currency crisis caused by its fixed nominal exchange rate. A team of local PEP researchers found that a policy to devalue the exchange rate while reducing government expenditures could help boost growth and employment in Bolivia. Short-term inflation is an inevitable result of devaluation but inflation rates increase the least when devaluation is accompanied by a fiscal adjustment.
Find out more about the research methods, findings and policy recommendations in the following PEP publications:

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