Currency undervaluation and growth: Is there a productivity channel?

Autor: Samba Mbaye
Přispěvatelé: Centre d'Études et de Recherches sur le Développement International (CERDI), Université d'Auvergne - Clermont-Ferrand I (UdA)-Centre National de la Recherche Scientifique (CNRS), Etudes & Documents - Publications, CERDI
Rok vydání: 2013
Předmět:
Transmission channel
JEL: F - International Economics/F.F3 - International Finance/F.F3.F31 - Foreign Exchange
05 social sciences
jel:F31
Monetary economics
[SHS.ECO]Humanities and Social Sciences/Economics and Finance
General Business
Management and Accounting
Aggregate productivity
Capital accumulation
Currency
8. Economic growth
0502 economics and business
real exchange rate
currency
misalignment
undervaluation
growth
productivity
China
Economics
JEL: O - Economic Development
Innovation
Technological Change
and Growth/O.O4 - Economic Growth and Aggregate Productivity/O.O4.O47 - Empirical Studies of Economic Growth • Aggregate Productivity • Cross-Country Output Convergence
jel:O47
050207 economics
[SHS.ECO] Humanities and Social Sciences/Economics and Finance
cerdi
Robustness (economics)
General Economics
Econometrics and Finance
Productivity
Total factor productivity
050205 econometrics
Communication channel
Zdroj: Économie Internationale
Économie Internationale, La Documentation française, 2013, 133, pp.8-28
International Economics
International Economics, Elsevier, 2013, 133, pp.8-28
International Economics, 2013, 133, pp.8-28
ISSN: 2110-7017
1240-8093
1777-5582
2542-6869
DOI: 10.1016/j.inteco.2013.04.004
Popis: Undervaluation of the currency is generally believed to affect growth through two main transmission channels: the “capital accumulation channel” and the “total factor productivity (TFP) growth channel”. This paper carries out the first empirical investigation on the TFP growth channel. More specifically, we provide answers to the three following questions: does undervaluation of the currency boost the overall productivity level in the economy? If so, does this “undervaluation-induced” productivity improvement significantly enhance growth? And finally, what is the magnitude of the TFP growth channel compared to the capital accumulation channel? The analysis is conducted on a panel of 72 countries over 1970–2008. The results give strong support to the TFP growth channel: a 10% increase in undervaluation enhances growth on average by 0.14% via an improvement in productivity. Most interestingly, our estimates suggest that this channel conveys the most important part of the growth-enhancing effect of undervaluation. The model has been subject to various robustness checks to support these findings.
Databáze: OpenAIRE
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