Flexible exchange rates boost economic growth in developing nations
The article explores how different exchange rate systems affect a country's economic growth by looking at how capital is accumulated. By using a model that considers both traded and non-traded goods, the researchers found that the exchange rate regime can impact how quickly an economy grows. They also discovered that a one-sector model is not enough to understand how the exchange rate affects real variables, and that differences between sectors play a crucial role in how the exchange rate influences capital accumulation.