Fear of appreciation

Levy-Yeyati, Eduardo Levy; Sturzenegger, Federico; Glüzmann, Pablo Alfredo

doi:10.1016/j.jdeveco.2012.11.008

Cited by 129 publications

(24 citation statements)

References 33 publications

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“…An interesting example is the study by Hausmann et al (2003) which identi…ed and analyzed determinants of 'growth episodes' in the latter half of the twentieth century and found that real exchange depreciations tend to precede sustained growth spurts. Other work includes Razin and Collins (1997), Polterovich and Popov (2002), Levi-Yeyati and Sturzenegger (2007), Gala (2007), Rodrik (2008), and Berg et al (2008). This emerging body of empirical evidence -along with East Asia's rapid accumulation of reserves in the pursuit of what is widely seen as 'export-led growth' -has stimulated interest in the theoretical linkages between the real exchange rate and growth.…”

Section: Introductionmentioning

confidence: 99%

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The real exchange rate and economic development

Razmi

Rapetti

Skøtt

2012

Structural Change and Economic Dynamics

142

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Recent empirical studies have found a robust correlation between competitive exchange rates and economic growth in developing economies. This paper presents (i) a formal model to help explain these findings and (ii) econometric evidence on the relation between investment and the real exchange rate. The model emphasizes the existence of (hidden) unemployment as a source of endogenous growth, even under constant returns to scale. Growth promoting policies, however, affect the external balance, and two instruments are needed in order to achieve targets for both the growth rate and the trade balance. The real exchange rate can serve as one of those instruments. The implications of the model for the relation between real exchange rates and the rate of capital accumulation find support in our econometric analysis.JEL classification: F43, O11, O41

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Section: Introductionmentioning

confidence: 99%

“…Levi-Yeyati and Sturzenegger (2007) …nd evidence that in the 2000s such interventions have aimed to maintain competitive exchange rates or to avoid overvaluations.…”

mentioning

confidence: 99%

The real exchange rate and economic development

Razmi

Rapetti

Skøtt

2012

Structural Change and Economic Dynamics

142

View full text Add to dashboard Cite

show abstract

“…For instance, Levy-Yeyati et al (2013) Another stream of the literature on foreign reserves suggests that mercantilist"s motives is a driving force of their accumulation (Dooley et al, 2003;Aizenman and Lee, 2007). Korinek and Serven (2010) found that the motive could be welfare-improving if learning-by-investing externalities are established in the tradeable sector.…”

Section: Exchange Rate and Reserve Accumulationmentioning

confidence: 99%

Empirical Analysis of Trilemma in Emerging Economies

Akinkunmi¹

2017

Asian Development Policy Review

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Article History JEL Classification E58, F31The increasing debate on empirical evidences in testing the Mundell-Fleming theory has been the focus of this study. The study examines the effect of central banks" interventions on trilemma constraint using a panel dataset of 30 emerging market economies for the sample period 1980-2014. With the aid of the portfolio balance framework, the findings indicate that the weighted sum of the three trilemma objectives falls in the presence of foreign exchange market intervention. The capacity to loosen the constraints has decreased over time and has been most substantial in African emerging economies. Contribution/ Originality:This study contributes in the existing literature by testing the hypothesis of trilemma constraint in all emerging economies, using the most recent data. The paper contributes the first logical analysis of disaggregating the emerging markets. It documents that central banks do not have the capacity to loosen the trilemma trade-off.

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“…As labor costs are reduced, profit margins are increased and investment, savings and capital accumulation are fostered and these conditions favor NBF. (Levy-Yeyati and Sturzenegger, 2007;Bhalla, 2007 andRodrik, 2008).…”

Section: Devaluation and Business Formation In Different Competitive mentioning

confidence: 99%

Devaluation, Competitiveness and New Business Formation in Emerging Countries

Herrera-Echeverri

Haar

Jiménez

et al. 2015

J. Dev. Entrepreneurship

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In September 2010, Brazil’s Finance Minister, Guido Mantega, used the term “currency war” with reference to monetary policies implemented by different countries to generate an artificial devaluation of their currency and achieve a cheaper, more competitive domestic economy that may be attractive to foreign investors. Similar cases have been documented since the 1930’s Great Depression, when several countries abandoned the gold standard as backing for their currencies. More recently, a large-scale asset purchase by Japan’s Central Bank in 2013 was singled out as a strategy aimed at generating devaluation of the yen. This research uses statistics of new business formation density reported by Doing Business for 30 emerging countries in the period from 2004 through 2011 to evaluate the impact of devaluation measured by the behavior of the real effective exchange rate (REER) on the rate of new business formation (NBF). It is determined how variables associated with competitiveness affect the relationship between devaluation and business formation. Results show that devaluation has a positive effect on NBF in the short term, which gets diluted in the long term. Countries with greater competitiveness have less dependence on devaluation to increase the number of businesses.

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Fear of appreciation

Cited by 129 publications

References 33 publications

The real exchange rate and economic development

The real exchange rate and economic development

Empirical Analysis of Trilemma in Emerging Economies

Devaluation, Competitiveness and New Business Formation in Emerging Countries

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