Working Paper: NBER ID: w16919
Authors: Barry Eichengreen; Donghyun Park; Kwanho Shin
Abstract: Using international data starting in 1957, we construct a sample of cases where fast-growing economies slow down. The evidence suggests that rapidly growing economies slow down significantly, in the sense that the growth rate downshifts by at least 2 percentage points, when their per capita incomes reach around $17,000 US in year-2005 constant international prices, a level that China should achieve by or soon after 2015. Among our more provocative findings is that growth slowdowns are more likely in countries that maintain undervalued real exchange rates.
Keywords: growth slowdowns; China; economic development; exchange rates
JEL Codes: F00; O10; O4
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| per capita GDP (E20) | likelihood of growth slowdowns (F62) |
| undervalued real exchange rates (F31) | likelihood of growth slowdowns (F62) |
| manufacturing employment share (L60) | likelihood of growth slowdowns (F62) |
| per capita GDP reaches $15,389 (P24) | peak probability of growth slowdowns (E32) |
| 23% manufacturing employment (L69) | likelihood of growth slowdowns increases (F62) |
| per capita income reaches $17,000 (D31) | downshift in growth rates (F62) |