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A Note on Nominal and Real Devaluation in Laos

Kyophilavong, Phouphet and Shahbaz, Muhammad and Salah Uddin, Gazi (2014): A Note on Nominal and Real Devaluation in Laos.

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Abstract

In this paper, we investigate whether or not nominal devaluation leads to real devaluation in Laos by using the ARDL bounds testing and the Granger causality test in a VECM framework. Our empirical evidence shows that nominal devaluation Granger causes real devaluation in short run and long run. This finding implies that nominal devaluation leads to real devaluation.

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