Research Catalog

Title

Devaluing to prosperity : misaligned currencies and their growth consequence / Surjit S. Bhalla.

Author

Bhalla, Surjit S.

Publication

Washington, DC : Peterson Institute for International Economics, 2012.

Items in the Library & Off-site

Details

Description

xviii, 263 pages : illustrations; 23 cm

Summary

Experts have long questioned the effect of currency undervaluation on overall GDP growth. They have viewed the underlying basis for this policy--intervention in currency markets to keep the price of the home currency cheap--as doomed to failure on both theoretical and empirical grounds. Moreover, the view has been that overvalued currencies hurt economic growth but undervalued currencies cannot help in growth acceleration. A parallel belief has been that the real exchange rate--that is, a country's competitive ranking--cannot be affected by merely changing the nominal exchange rate. This view is grounded in the belief, and expectation, that inflation follows any devaluation of currency. Hence, the conclusion that the real exchange rate cannot be affected by policy. However, given China's remarkable performance in recent decades, this traditional view is being reexamined. China devalued its currency by large amounts in the 1980s and early 1990s; instead of inflation, it achieved high growth. Today, there is near-universal demand for China to significantly revalue its currency. This book examines the veracity of various propositions relating to currency misalignments, and their effect on various items of policy interest. The author subjects more than a century of global exchange rate management and growth outcomes to rigorous empirical analysis and demonstrates convincingly that a country can systematically devalue and yet prosper. The analysis helps in interpreting several phenomena, especially for the last three decades, which have witnessed high economic growth in developing countries, a widening of global imbalances, and a sharp increase in reserve accumulation, particularly among high-growth Asian economies. The book shows that these events are strongly linked via a consistent policy of currency undervaluation in Asian economies.

Alternative Title

Misaligned currencies and their growth consequence

Subjects

• Developing countries
• Economic development
• Developing countries > Commerce
• International trade
• Economic development > Developing countries
• Monetary policy
• Abwertung
• Devaluation of currency
• Foreign exchange rates
• Wachstumstheorie
• Commerce
• Währungspolitik

Bibliography (note)

• Includes bibliographical references and index.

Contents

Introduction -- The determinants of economic growth -- Currency valuation, savings, and the current account -- Measuring currency valuation -- The yin and yang of investment -- Is the real exchange rate endogenous? -- Rashomon rules: US dollar, euro dollar? -- Currency valuation and growth -- Policy failures and growth miracles -- Mercantilism and miracles -- Institutions versus exchange rate policy -- Currency undervaluation: a time-tested policy for growth -- The economics of the yen and the renminbi -- Changing times, changing views -- Conclusion.

Call Number

JBE 17-823

ISBN

• 9780881326239
• 0881326232

LCCN

2012025158

OCLC

796355095

Author

Bhalla, Surjit S.

Title

Devaluing to prosperity : misaligned currencies and their growth consequence / Surjit S. Bhalla.

Imprint

Washington, DC : Peterson Institute for International Economics, 2012.

Type of Content

text

Type of Medium

unmediated

Type of Carrier

volume

Bibliography

Includes bibliographical references and index.

Research Call Number

JBE 17-823