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The role of the exchange rate in economic growth: a euro-zone perspective

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Author Info
Ronald MacDonald () (University of Strathclyde, Department of Economics)

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Abstract

In this paper we consider a range of topics which connect exchange rates to the economic growth process. In particular, we first of all outline the basic properties of exchange rates when they are flexible. One key feature of flexible exchange rates is that they are highly volatile and such volatility may affect growth through the channels of trade and investment. These channels are considered in some detail in this paper. We also consider the links between sectoral and aggregate growth and the exchange rate, using the Balassa-Samuelson and Houthakker-Magee-Krugman hypotheses. The main conclusion of the paper is that the current exchange rate arrangements for the euro-zone area, both internal and external, are likely to stimulate economic growth.

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Paper provided by National Bank of Belgium in its series Research series with number 200005-5.

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Length: 73 pages
Date of creation: May 2000
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Handle: RePEc:nbb:reswpp:200005-5

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    Other versions:
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Cited by:
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  5. Luc Aucremanne & Emmanuel Dhyne, 2004. "How frequently do prices change? Evidence based on the micro data underlying the Belgian CPI," Research series 200404-1, National Bank of Belgium. [Downloadable!]
  6. Frédéric Lagneaux, 2004. "Importance économique du Port Autonome de Liège: rapport 2002," Documents series 200411-3, National Bank of Belgium. [Downloadable!]
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  12. Frédéric Lagneaux, 2005. "Importance économique du Port Autonome de Liège: rapport 2003," Documents series 200510-1, National Bank of Belgium. [Downloadable!]
  13. Stefaan Ide & Philippe Moës, 2003. "Scope of asymmetries in the Euro area," Documents series 200303-2, National Bank of Belgium. [Downloadable!]
  14. Helga De Doncker, 2006. "Crédits aux particuliers - Analyse des données de la Centrale des Crédits aux Particuliers," Documents series 200601-1, National Bank of Belgium. [Downloadable!]
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  17. Catherine Fuss & Philip Vermeulen, 2004. "Firms' investment decisions in response to demand and price uncertainty," Research series 200404-2, National Bank of Belgium. [Downloadable!]
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