Abstract
This paper presents a general equilibrium model of a small open economy with monopolistically competitive retailers, inventories and durable goods. Following large devaluations, this model generates a collapse of imports, a fall of retail sales and inventories and a gradual increase in retail prices. Besides, the model provides an explanation for a short-lived spike in retail sales of durable goods observed during the recent devaluation episode in Russia in December of 2014.
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