Language:
English
Pages:
Online-Ressource (1 online resource (39 p.))
Edition:
Online-Ausg. World Bank E-Library Archive
Parallel Title:
Levy-Yeyati, Eduardo Fear of Appreciation
Keywords:
Capital Accumulation
;
Central Bank
;
Currencies and Exchange Rates
;
Debt Markets
;
Depreciations
;
Domestic Savings
;
Economic Theory and Research
;
Emerging Markets
;
Exchange Rate
;
Exchange Rate Regimes
;
Exchange Rates
;
Finance and Financial Sector Development
;
Growth Performance
;
Import
;
Macroeconomic Management
;
Macroeconomics and Economic Growth
;
Private Sector Development
;
Real Exchange Rate
;
Capital Accumulation
;
Central Bank
;
Currencies and Exchange Rates
;
Debt Markets
;
Depreciations
;
Domestic Savings
;
Economic Theory and Research
;
Emerging Markets
;
Exchange Rate
;
Exchange Rate Regimes
;
Exchange Rates
;
Finance and Financial Sector Development
;
Growth Performance
;
Import
;
Macroeconomic Management
;
Macroeconomics and Economic Growth
;
Private Sector Development
;
Real Exchange Rate
;
Capital Accumulation
;
Central Bank
;
Currencies and Exchange Rates
;
Debt Markets
;
Depreciations
;
Domestic Savings
;
Economic Theory and Research
;
Emerging Markets
;
Exchange Rate
;
Exchange Rate Regimes
;
Exchange Rates
;
Finance and Financial Sector Development
;
Growth Performance
;
Import
;
Macroeconomic Management
;
Macroeconomics and Economic Growth
;
Private Sector Development
;
Real Exchange Rate
Abstract:
In recent years the term "fear of floating" has been used to describe exchange rate regimes that, while officially flexible, in practice intervene heavily to avoid sudden or large depreciations. However, the data reveals that in most cases (and increasingly so in the 2000s) intervention has been aimed at limiting appreciations rather than depreciations, often motivated by the neo-mercantilist view of a depreciated real exchange rate as protection for domestic industries. As a first step to address the broader question of whether this view delivers on its promise, the authors examine whether this "fear of appreciation" has a positive impact on growth performance in developing economies. The authors show that depreciated exchange rates appear to induce higher growth, but that the effect, rather than through import substitution or export booms as argued by the mercantilist view, works largely through the deepening of domestic savings and capital accumulation
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