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Title: |
Does Latin America Have More to Gain from Exchange Rate Liberalization
than Sub-Saharan Africa? |
| Author: |
Armah,
Bartholomew |
| Author
Affiliation: |
U WI |
| Source: |
International Economic Journal, Summer 2000, v. 14, no. 2, pp. 113-132 |
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Publication Date: |
Summer 2000 |
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Abstract: |
An examination of the relationship between
exchange rate liberalization and economic growth in selected Latin
American and Sub-Saharan African countries reveals evidence of a
short-run causal relationship between the two variables in both Latin
America and Sub-Saharan Africa. Within each region, exchange rate
liberalization causes growth in some countries while others exhibit
reverse causality running from growth to exchange rate liberalization.
The key distinction between the regions is that, while liberalization of
the exchange rate leads to increased growth and growth induces exchange
rate liberalization in most Latin American countries, in the majority of
Sub-Saharan African countries studied, exchange rate liberalization
reduces growth while growth causes distortions in the exchange rate.
Market imperfections, expansionary fiscal and monetary policies under a
fixed exchange rate regime, and poor terms of trade are cited as
possible explanations for the findings for Sub-Saharan Africa. |
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