Immiserizing Growth in Next-Eleven: The Effect of Real Exchange Rate on Trade

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İzmir International Congress on Economics and Administrative Sciences (IZCEAS)
IZCEAS 2018 FULL PAPER BOOK
Immiserizing Growth in Next-Eleven: The Effect of Real Exchange Rate on Trade

Immiserizing Growth in Next-Eleven: The Effect of Real Exchange Rate on Trade

Authors : Yağmur Sağlam, Ayşegül Çimen

Pages : 2491-2506

View : 77 | Download : 28

Publication Date : 2018-12-31

Abstract :There are two different approaches, pass-through effect and standard theory, tested in this study with Structural Vector Autoregressive (SVAR) Model. Also the theory of Bhagwati (1958), ‘if the growth is based on export, the trade terms can fall and growth could cause the economy of the country to be worse than before,’ has been tested. The annual data is collected for the period between 1980 and 2017 from World Bank Development Indicators. After preliminary tests, empirical result implicates that there is a negative relationship between economic growth and terms of trade. So possible to say that there is an immiserizing growth but according to impulse-response functions, in the long-run neither pass through effect nor standard theory are not acceptable for Next-11 countries. As well, we can not cite that there is an immiserizing growth in the long-run for the same reason. Due to responses of terms of trade to real exchange rate and real exchange rate to terms of trade is neutral and intersects with axis x.
Keywords : Next-11, SVAR, Immiserizing Growth, Exchange Rates.

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