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:
Research team:
Country:
Bolivia
Project code:
20260
Project link: