Exchange Rate Parity for Trade and Development: Theory, Tests, and Case Studies

by Pan A. Yotopoulos

Overview

Yotopoulos extends recent theories of incomplete markets to investigate empirically the appropriate balance between the market and the state in the trade relations between developed and developing countries. The conclusion is that in an ideal world government intervention in foreign exchange and trade is necessary in developing countries in the early stages and inevitably decreases as development occurs. The analysis and tests draw on empirical research from seventy countries and four extended country studies to confirm the usefulness and validity of the theoretical framework.

Product Details

ISBN-13:	9780521482165
Publisher:	Cambridge University Press
Publication date:	10/27/1995
Edition description:	New Edition
Pages:	344
Product dimensions:	5.98(w) x 9.02(h) x 0.94(d)

Table of Contents

Part I. A Review of the Terrain: 1. Introduction; 2. Trade and development: the contours of the landscape; 3. Incomplete markets and the 'New Development Economics'; Part II. Theory and Empirical Analysis: 4. Market incompleteness in an open-economy LDC; 5. The relationship between real and nominal exchange rates; 6. Empirical investigation of real exchange rates: tradability and relative prices; 7. An endogenous growth model of incomplete markets in foreign exchange; 8. Are devaluations possibly contractionary? A quasi-Australian model with tradables and nontradables; Part III. Successes and Failures in Development: Good/Bad Economics and Governance: 9. Japan: overvaluation without rent-seeking; 10. The Philippines: failure in policy and politics; 11. Financial integration and the refractory role of intervention: Uruguay and Taiwan; 12. Summary, conclusions and policy recommendations; Bibliography.

Editorial Reviews

"I thoroughly enjoyed reading this book and found it most stimulating. What a pleasure it is to read careful empirical work by an author who worries about what his data mean....I find the basic analysis interesting and quite convincing in positive terms." L. Alan Winters, International Trade Division, The World Bank

"This important work makes a major and very timely contribution to the current debate about development strategy for less developed countries, as well as to the debate on restructuring the former Soviet Bloc economies.... Yotopoulos also helps shift the debate from economic theory to institutional and political economy issues, a worthwhile shift." David Felix, Washington University in St. Louis

"This is a tightly written book on trade and development, firmly based in the real world, which cannot be said about a great deal of economic theory today." Maxwell J. Fry, University of Birmingham

"The hallmark of a good book is not that it answers all questions, but that it changes the way we think. Professor Yotopoulos has given us an original and important idea, and enough evidence to cause us to take it seriously. For these contributions, we owe him a debt of gratitude..." Adrian Wood, The Journal of Development Studies

"...the strength of this book is the empirical analyses of the relation between exchange rates and growth. The results are quite novel (and provocative) and should instigate further empirical analyses on this subject....the empirical results are interesting..." Bo Sandemann Rasmussen, Journal of Economic Literature

"...its insightful observations, emanating from its empirical analysis and an impressively exhaustive literature review, are borne out by African and East European Experience..." Perry S. Mistry, Development Policy Review

"Exchange Rate Parity for Trade and Development by Pan Yotopoulos represents a valuable contribution...." David Felix, Latin American Research Review

"He has written an ambitious book...Exchange Rate Parity for Trade and Development is a provocative, interesting book" Review of Radical Political Economics

Yotopoulos wants to show that recent theories of incomplete markets justify a reformulation of optimal exchange-rate policy in developing countries." Review of Radical Political Economics

From the Publisher