Skip Navigation


Cambridge Journal of Economics Advance Access first published online on October 4, 2007
This version published online on November 1, 2007
Cambridge Journal of Economics, doi:10.1093/cje/bem021
This Article
Right arrow Full Text
Right arrow Full Text (PDF)
Right arrow All Versions of this Article:
32/1/83    most recent
bem021v3
bem021v2
bem021v1
Right arrow Alert me when this article is cited
Right arrow Alert me if a correction is posted
Services
Right arrow Email this article to a friend
Right arrow Alert me to new issues of the journal
Right arrow Add to My Personal Archive
Right arrow Download to citation manager
Right arrowRequest Permissions
Google Scholar
Right arrow Articles by Blecker, R. A.
Right arrow Articles by Razmi, A.
Right arrow Search for Related Content
Social Bookmarking
Add to CiteULike   Add to Connotea   Add to Del.icio.us  
What's this?

© The Author 2007. Published by Oxford University Press on behalf of the Cambridge Political Economy Society. All rights reserved.

The fallacy of composition and contractionary devaluations: output effects of real exchange rate shocks in semi-industrialised countries

Robert A. Blecker and Arslan Razmi*

* American University, Washington, DC, USA, and University of Massachusetts, Amherst, MA, USA, respectively

Address for correspondence: Robert A. Blecker, Department of Economics, American University, 4400 Massachusetts Avenue, N.W., Washington, DC 20016-8029, USA; email: blecker{at}american.edu

This paper studies whether intra-developing country price competition has significant effects on the short-run growth of output in developing countries that are specialised in manufactured exports. Regression estimates using the generalised method of moments applied to annual panel data for 17 semi-industrialised countries in 1983–2004 show that these countries exhibit a ‘fallacy of composition’, in the sense that a real depreciation relative to competing developing country exporters increases the home country's growth rate at the expense of its competitors' growth. The results also suggest that real depreciations for these developing countries relative to the industrialised countries are contractionary.

Key Words: Real exchange rates • Fallacy of composition • Manufactured exports • Contractionary devaluations • Semi-industrialised countries

JEL classifications: O11, F43, O14, F32

The originally published version of this paper was incorrect. The tables and the table footnotes contained several errors which have been corrected now.

Manuscript received November 21, 2005; final version received February 19, 2007.


Add to CiteULike CiteULike   Add to Connotea Connotea   Add to Del.icio.us Del.icio.us    What's this?




Disclaimer:
Please note that abstracts for content published before 1996 were created through digital scanning and may therefore not exactly replicate the text of the original print issues. All efforts have been made to ensure accuracy, but the Publisher will not be held responsible for any remaining inaccuracies. If you require any further clarification, please contact our Customer Services Department.