Devaluation, competitiveness and new business formation in emerging countries


Autoria(s): Herrera-Echeverri, Hernán; Haar, Jerry; Arrieta Jiménez, Alexander; Araújo Zapata, Manuel
Contribuinte(s)

hherrer2@eafit.edu.co

aarrieta@eafit.edu.co

maraujo1@eafit.edu.co

Cobertura

Medellín de: Lat: 06 15 00 N degrees minutes Lat: 6.2500 decimal degrees Long: 075 36 00 W degrees minutes Long: -75.6000 decimal degrees

Data(s)

11/06/2016

02/05/2016

11/06/2016

Resumo

In September 2010, Brazil’s Finance Minister, Guido Mantega, used the term “currency war” with reference to monetary policies implemented by different countries to generate an artificial devaluation of their currency and achieve a cheaper, more competitive domestic economy that may be attractive to foreign investors. Similar cases have been documented since the 1930s Great Depression, when several countries abandoned the gold standard as backing for their currencies. More recently, a large-scale asset purchase by Japan’s Central Bank in 2013 was singled out as a strategy aimed at generating devaluation of the yen. This research uses statistics of new business formation density reported by Doing Business for 30 emerging countries in the period 2004-2011 to evaluate the impact of devaluation measured by the behavior of the real effective exchange rate (REER) on the rate of new business formation (NBF). It is determined how variables associated with competitiveness affect the relationship between devaluation and business formation. Results show that devaluation has a positive effect on NBF in the short term, which gets diluted in the long term. Countries with greater competitiveness have less dependence on devaluation to increase the number of businesses.

Identificador

http://hdl.handle.net/10784/8565

G18

G24

M13

Idioma(s)

eng

Publicador

Universidad EAFIT

Escuela de Economía y Finanzas

Direitos

info:eu-repo/semantics/openAccess

openAccess

Libre acceso

Palavras-Chave #New business formation #emerging countries #devaluation #competitiveness
Tipo

workingPaper

Documento de trabajo de investigación

draf