Devaluation of the currency has been stipulated and utilized increasingly as a stabilization device in developing countries. The Ethiopian government employed a devaluation policy to improve the export performance of the country. However, various literature demonstrates that the devaluation of...

According to the two-country full information New Keynesian model with flexible exchange rates, the real exchange rate appreciates in response to an asymmetric negative demand shock at the zero lower bound (ZLB) and exacerbates the adverse macroeconomic effects. This finding requires inflation...