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Currency Devaluation and Output Growth in Asia

Author

Listed:
  • Shu-Ching Huang

    () (Department of International Trade, Kun Shan University, Taiwan)

  • Chao-Min Hsu

    (Department of International Trade, Kun Shan University, Taiwan)

  • Ming-Hsein Kang

    (Department of Finance Banking, Kun Shan University, Taiwan)

Abstract

According to the traditional theory, it is expected that depreciation in domestic currency generally decreases the relative price of domestically produced goods and thereby stimulates demand for domestic export. Hence, currency depreciation can be expected to have expansionary effects on real output in Asia. But there is now enough studies evidence that currency devaluation can lead to lower rates of economic growth. So this study use more rigorous empirical model and econometric methodology examines the effect of currency devaluation on output expansion in Asian countries. The empirical results finds it depreciation exerts a positive impact on output growth in Asian countries.

Suggested Citation

  • Shu-Ching Huang & Chao-Min Hsu & Ming-Hsein Kang, 2010. "Currency Devaluation and Output Growth in Asia," Journal of Economics and Management, College of Business, Feng Chia University, Taiwan, vol. 6(1), pages 113-131, January.
  • Handle: RePEc:jec:journl:v:6:y:2010:i:1:p:113-131
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    More about this item

    Keywords

    contractionary devaluations; heterogeneous panel cointegration tests; full modified OLS; dynamic OLS;

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • F31 - International Economics - - International Finance - - - Foreign Exchange

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