Veranstaltungen des DIW Berlin/
Events of DIW Berlin

18 May 2016

DIW Seminar on Macroeconomics and Econometrics Currency Wars: Who Gains from the Battle?

We study the growth effects of currency undervaluation when countries employ active exchange rate management policies or impose capital controls, using a panel dataset of 185 countries. Applying two-stage regressions, we find that changes in undervaluation driven by exchange rate management and capital control policies have no significant impact on economic growth. Undervaluation that leads to higher growth mainly stems from policies that lower government consumption, reduce inflation and increase domestic savings. However, these policies are good for growth by themselves, with only limited additional growth effects through increased currency undervaluation. In sum, we find no evidence that battling in the currency depreciation war significantly increases a country’s growth rate.

More Information
  • Roy Kouwenberg, Mahidol University

  • Time
    12:00 - 13:15
    DIW Berlin (Gustav-Schmoller-Raum) DIW Berlin im Quartier 110 Room 3.3.002A Mohrenstraße 58 10117 Berlin
    at DIW Berlin
    Tel.: +49 30 89789 581
    Tel.: +49 30 89789 439