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Competitive Exchange Rate and Public Infrastructure in a Macrodynamic of Economic Growth

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  • Antonio Soares Martins Neto
  • Gilberto Tadeu Lima

Abstract

We develop a dual open-economy model which incorporates a flow of public infrastructure as a factor of production to investigate effects of a competitive exchange rate policy under different levels of provision of public infrastructure. It is suggested that an exchange rate policy coordinated with a public infrastructure policy should produce better results. By increasing productivity in the tradable sector and by reducing inflationary pressures, this supply-side public policy contributes to the success of an economic growth strategy led by a competitive currency.

Suggested Citation

  • Antonio Soares Martins Neto & Gilberto Tadeu Lima, 2015. "Competitive Exchange Rate and Public Infrastructure in a Macrodynamic of Economic Growth," Working Papers, Department of Economics 2015_20, University of São Paulo (FEA-USP), revised 05 Apr 2016.
    • Handle: RePEc:spa:wpaper:2015wpecon20
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    More about this item

    Keywords

    Exchange rate policy; public infrastructure; economic development.;
    All these keywords.

    JEL classification:

    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy

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