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This thesis constitutes a comprehensive study of fiscal devaluations. The
aim is to compile and simplify the literature on the subject, in order to
better understand the mechanism and the effects of fiscal devaluation
policies. Using a deterministic model of a small open economy with
flexible prices and wages, we start by identifying the relevant
equilibrium conditions and analysing the equivalence between fiscal
and nominal devaluations. We then consider a simple model with fixed
exchange rates and nominal wage rigidity to study how fiscal
devaluations can be used to restore equilibrium in the labour market.
While the consideration of fiscal devaluations in simplified frameworks
is in fact adequate as a first approach, a complete and accurate study of
these policies may require the use of models of higher complexity.