Exchange Rate Parity for Trade Development Theory Tests Case Stud… 9780521482165

Exchange Rate Parity for Trade and DevelopmentTheory, Tests, and Case Studies\nAuthor(s): Pan A. Yotopoulos\nFormat: Hardback\nPublisher: Cambridge University Press, United Kingdom\nImprint: Cambridge University Press\nISBN-13: 9780521482165, 978-0521482165\nSynopsis\nThis book extends recent theories of incomplete markets to investigate empirically the appropriate balance between the market and the state in the trade relations between developed and developing countries. The conclusion is that in an ideal world government intervention in foreign exchange and trade is necessary in developing countries in the early stages and inevitably decreases as development occurs. Rationing of foreign exchange prevents a 'soft currency distortion' that commonly afflicts developing countries and can turn comparative advantage trade into competitive devaluation trade, with severe losses of income and welfare. Yotopoulos finds that the level of underdevelopment narrowly circumscribes and conditions t.