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When Fast-Growing Economies Slow Down: International Evidence and Implications for China

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Author Info

  • Barry Eichengreen

    ()
    (Department of Economics, University of California, Berkeley)

  • Donghyun Park

    ()
    (Economics and Research Department, Asian Development Bank, Mandaluyong City, Metro Manila, Philippines)

  • Kwanho Shin

    ()
    (Department of Economics, Korea University)

Abstract

Using international data starting in 1957, we construct a sample of cases where fast-growing economies slow down. The evidence suggests that rapidly growing economies slow down significantly, in the sense that the growth rate downshifts by at least 2 percentage points, when their per capita incomes reach around US$ 17,000 in year-2005 constant international prices, a level that China should achieve by or soon after 2015. Among our more provocative findings is that growth slowdowns are more likely in countries that maintain undervalued real exchange rates. © 2012 The Earth Institute at Columbia University and the Massachusetts Institute of Technology.

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Bibliographic Info

Article provided by MIT Press in its journal Asian Economic Papers.

Volume (Year): 11 (2012)
Issue (Month): 1 (February)
Pages: 42-87

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Handle: RePEc:tpr:asiaec:v:11:y:2012:i:1:p:42-87

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Related research

Keywords: China; economic growth; slowdown;

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References

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  1. Ben S. Bernanke & Refet S. Gürkaynak, 2002. "Is Growth Exogenous? Taking Mankiw, Romer, and Weil Seriously," NBER Chapters, in: NBER Macroeconomics Annual 2001, Volume 16, pages 11-72 National Bureau of Economic Research, Inc.
  2. Carmen M. Reinhart & Kenneth S. Rogoff, 2011. "From Financial Crash to Debt Crisis," American Economic Review, American Economic Association, vol. 101(5), pages 1676-1706, August.
  3. Barro, Robert J. & Lee, Jong Wha, 2013. "A new data set of educational attainment in the world, 1950–2010," Journal of Development Economics, Elsevier, vol. 104(C), pages 184-198.
  4. Loren Brandt & Johannes Van Biesebroeck & Yifan Zhang, 2009. "Creative Accounting or Creative Destruction? Firm-level Productivity Growth in Chinese Manufacturing," NBER Working Papers 15152, National Bureau of Economic Research, Inc.
  5. Timothy J. Kehoe & Kim J. Ruhl, 2010. "Why Have Economic Reforms in Mexico Not Generated Growth?," Journal of Economic Literature, American Economic Association, vol. 48(4), pages 1005-27, December.
  6. Ricardo Hausmann & Francisco Rodríguez & Rodrigo Wagner, 2006. "Growth Collapses," Wesleyan Economics Working Papers 2006-024, Wesleyan University, Department of Economics.
  7. Lee, Jong-Wha & Hong, Kiseok, 2010. "Economic Growth in Asia: Determinants and Prospects," ADB Economics Working Paper Series 220, Asian Development Bank.
  8. Robert W. Fogel, 2007. "Capitalism and Democracy in 2040: Forecasts and Speculations," NBER Working Papers 13184, National Bureau of Economic Research, Inc.
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Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Ways Round the Middle Income Trap
    by Shifting Wealth in ShiftingWealth on 2011-11-07 14:23:00
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
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Cited by:
  1. Arielle Joseph & Bernhard Troester, 2013. "Can the Mauritian Miracle continue? - The role of financial and ICT services as prospective growth drivers," Competence Centre on Money, Trade, Finance and Development 1301, Hochschule fuer Technik und Wirtschaft, Berlin.
  2. Vivarelli, Marco, 2014. "Structural Change and Innovation as Exit Strategies from the Middle Income Trap," IZA Discussion Papers 8148, Institute for the Study of Labor (IZA).
  3. Anderson, Kym & Jha, Shikha & Nelgen, Signe & Strutt, Anna, 2012. "Reexamining Policies for Food Security," ADB Economics Working Paper Series 301, Asian Development Bank.
  4. Chen, Xi & Funke, Michael, 2013. "The dynamics of catch-up and skill and technology upgrading in China," Journal of Macroeconomics, Elsevier, vol. 38(PB), pages 465-480.
  5. Bonatti, Luigi & Fracasso, Andrea, 2014. "Modeling the Transition Towards Renminbi's Full Convertibility: Implications for China’s Growth," MPRA Paper 54129, University Library of Munich, Germany.
  6. Im, Fernando Gabriel & Rosenblatt, David, 2013. "Middle-income traps : a conceptual and empirical survey," Policy Research Working Paper Series 6594, The World Bank.
  7. Barbara Dluhosch & Michael Pflüger & Philipp Ehrl & Volker Treier, 2013. "Asien, Lateinamerika: Verschiebt der Aufstieg der neuen Wachstumsmärkte das Kräfteverhältnis auf dem Weltmarkt?," Ifo Schnelldienst, Ifo Institute for Economic Research at the University of Munich, vol. 66(04), pages 03-14, 03.
  8. Rod Tyers, 2013. "Looking Inward for Transformative Growth in China," CAMA Working Papers 2013-48, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
  9. Israel Malkin & Mark M. Spiegel, 2012. "Is China due for a slowdown?," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue oct15.
  10. Keun Lee and John Mathews, 2013. "Science, technology and innovation for sustainable development," CDP Background Papers 016, United Nations, Department of Economics and Social Affairs.
  11. Arvind Virmani, 2012. "Accelerating And Sustaining Growth," IMF Working Papers 12/185, International Monetary Fund.
  12. Lee Robinson & Alice Nicole Sindzingre, 2012. "China’s Ambiguous Impacts on Commodity-Dependent Countries: the Example of Sub-Saharan Africa (with a Focus on Zambia)," EconomiX Working Papers 2012-39, University of Paris West - Nanterre la Défense, EconomiX.
  13. Paul Hubbard & Samuel Hurley & Dhruv Sharma, 2012. "The familiar pattern of Chinese consumption growth," Economic Roundup, Treasury, Australian Government, issue 4, pages 63-78, December.
  14. Shekhar Aiyar & Romain A Duval & Damien Puy & Yiqun Wu & Longmei Zhang, 2013. "Growth Slowdowns and the Middle-Income Trap," IMF Working Papers 13/71, International Monetary Fund.
  15. Scott Bowman & Patrick Conway, 2013. "The Outlook for China’s Growth and its Impact on New Zealand Exports," Treasury Working Paper Series 13/16, New Zealand Treasury.
  16. Barry Eichengreen, 2011. "Escaping the middle-income trap," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 409-419.
  17. Schellekens, Philip, 2013. "A Changing China: Implications for Developing Countries," World Bank - Economic Premise, The World Bank, issue 118, pages 1-9, May.
  18. Crafts, Nicholas & O’Rourke, Kevin Hjortshøj, 2014. "Twentieth Century Growth*This research has received funding from the European Research Council under the European Union’s Seventh Framework Programme (FP7/2007-2013) / ERC grant agreement no. 249546," Handbook of Economic Growth, in: Handbook of Economic Growth, edition 1, volume 2, chapter 6, pages 263-346 Elsevier.
  19. Nicole Alice Sindzingre, 2011. "The Rise of China in Sub-Saharan Africa: its Ambiguous Economic Impacts," Post-Print halshs-00636022, HAL.
  20. Jane Haltmaier, 2013. "Challenges for the future of Chinese economic growth," International Finance Discussion Papers 1072, Board of Governors of the Federal Reserve System (U.S.).

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