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This paper examines the pros and cons of gradual versus big-bang approaches toward devaluations. It presents original empirical evidence regarding output, consumption, investment and trade balances associated with gradual and big-bang devaluation episodes. It finds that big-bang devaluations are associated with lower output, investment and consumption, while gradual devaluations are not associated with any contemporaneous drops. Five case studies of gradual devaluations are also conducted.

Business cycles and stabilization policies --- Capital flows --- Capital markets and capital flows --- Currencies and exchange rates --- Economic conditions and volatility --- Finance and financial sector development --- Fiscal and monetary policy --- Fiscal policy --- Macroeconomics and economic growth --- Monetary policy