Bergin, Paul , Corsetti, Giancarlo, (2016), “Beyond competitive devaluations: The monetary dimensions of comparative advantage”, Voxeu, 11 January
Competitive devaluation is a long-standing idea in international macroeconomic theory. This column takes a step back from the current debate and assesses a different perspective on monetary and exchange rate policies. Strategic behaviour is shown to be detrimental from a global welfare perspective. Due to negative spillovers elsewhere, devaluations invite retaliation – which in turn reduces manufacturing at the global level. Monetary policy can provide a non-negligible contribution to fostering comparative advantage in high-value branded manufacturing goods by pursuing efficient macroeconomic stabilisation.
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- Camacho, Máximo, Leiva-Leon, Danilo, Pérez-Quirós, Gabriel, (2015), “Monetary policy expectations and aggregate EZ shocks”, Voxeu, 1 December
- Draghi, Mario, (2015), “Monetary Policy: Past, Present and Future”, Speech at the Frankfurt European Banking Congress, 20 November