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Are devaluations contractionary in Asia?

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Author Info

  • MOHSEN BAHMANI-OSKOOEE
  • SOUPHALA CHOMSISENGPHET
  • MAGDA KANDIL

Abstract

The main purpose of this paper is to determine empirically whether currency depreciation is expansionary or contractionary in Asian countries. It is argued that by disrupting the operation of the financial sector and by introducing uncertainty among consumers and investors, currency depreciation could be contractionary. A reduced-form model is introduced and tested by means of cointegration analysis. The results support our theoretical argument that in many Asian countries depreciation is contractionary.

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Bibliographic Info

Article provided by M.E. Sharpe, Inc. in its journal Journal of Post Keynesian Economics.

Volume (Year): 25 (2002)
Issue (Month): 1 (January)
Pages: 69-82

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Handle: RePEc:mes:postke:v:25:y:2002:i:1:p:69-82

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Web page: http://mesharpe.metapress.com/link.asp?target=journal&id=109348

Related research

Keywords: Asia; cointegration; contractionary devaluations;

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Cited by:
  1. HSING, Yu & GUISAN, M.C., 2011. "Real Exchange Rate, Foreign Trade And Real Output Growth: The Case Of Spain, 1970-2009," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 11(1).
  2. Yu Hsing, 2010. "Euro and Technology Effects on Job Turnover in Greek Manufacturing," International Journal of Economic Sciences and Applied Research (IJESAR), Technological Educational Institute (TEI) of Kavala, Greece, vol. 3(1), pages 39-47, July.
  3. MITEZA, Ilir, 2006. "Devaluation And Output In Five Transition Economies: A Panel Cointegration Approach Of Poland, Hungary, Czech Republic, Slovakia And Romania, 1993-2000," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 6(1).
  4. Artatrana Ratha & Eungmin Kang & Mary Edwards, 2008. "Does an Undervalued Currency Promote Growth? Evidence from China," Working Papers 2008-2 Classification- F3, Saint Cloud State University, Department of Economics.
  5. Magda E. Kandil & Mohsen Bahmani-Oskooee, 2007. "Exchange Rate Fluctuations and Output in Oil-Producing Countries: The Case of Iran," IMF Working Papers 07/113, International Monetary Fund.
  6. Yu Hsing, 2006. "Responses of output in Poland to shocks to the exchange rate, the stock price, and other macroeconomic variables: a VAR model," Applied Economics Letters, Taylor & Francis Journals, vol. 13(15), pages 1017-1022.
  7. Munir A. S. Choudhary & Muhammad Aslam Chaudhry, 2007. "Effects of the Exchange Rate on Output and Price Level: Evidence from the Pakistani Economy," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 12(1), pages 49-77, Jan-Jun.
  8. Artatrana Ratha, 2010. "Does Devaluation work for India?," Economics Bulletin, AccessEcon, vol. 30(1), pages 247-264.
  9. repec:ebl:ecbull:v:30:y:2010:i:1:p:247-264 is not listed on IDEAS

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