Output Growth and Trade Performance
Output Growth and Trade Performance
This chapter addresses three main questions. First, do currency boards result in slower output growth, controlling for other potential determinants? Second, does competitiveness and export performance suffer under currency boards? Third, does the adoption of a currency board arrangement (CBA) with the implied loss of the exchange rate as an adjustment tool lead to more volatile output growth? The evidence suggests a weak link between currency boards and growth performance. For upper-income countries, the growth rate does not appear to be robustly related to the exchange rate regime. For lower-income countries, there is an economically and statistically significant effect in favor of currency boards.
Keywords: currency board arrangement, competitiveness, export performance, economic growth, exchange rate
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