Budget Deficit and Exchange Rate in Haiti from 2010 to 2023

The thesis asks how the budget deficit has affected the exchange rate in Haiti between 2010 and 2023. Its general hypothesis is that a high deficit led to a depreciation of the gourde. Chapters define the concepts and review the theory and literature, and the empirical chapter estimates a VAR model on time series for 2010 to 2023.

The conclusion says the deficit stayed high because of weak tax collection, high public spending and political instability, and that the gourde fell from 40 to nearly 120 per US dollar between 2010 and 2023. The VAR results show a positive correlation between the current account balance and the budget balance, with the former causing the latter. Impulse responses show the current account reacting positively to an exchange rate shock and the budget balance reacting negatively but weakly, while a deficit shock has a positive effect on the exchange rate, which the author reads as a larger deficit accompanied by an appreciation. The author calls for reforms to stabilize the currency, reduce the deficit and strengthen economic resilience.