Technological Gap and the Currency Crisis in a Small Developing Economy

Hui-Kuan Tseng (htseng@email.uncc.edu)
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Hui-Kuan Tseng: The University of North Carolina at Charlotte, Department of Economics, Postal: 9201 University City Blvd Charlotte NC 28223-0001, USA ,, http://www.uncc.edu/

Economia Internazionale / International Economics, 2004, vol. 57, issue 2, 195-212

Abstract: Technological factors can have noticeable effects on the exact timing of collapse of a small developing economy’s fixed exchange rate regime stemming from uncontrolled domestic credit expansion. We show that if such an economy keeps a constant technological gap with the innovative developed world, an inevitable collapse of its fixed rate regime can be postponed by faster foreign innovation combined with international technology diffusion. However, by numerical simulations a widening of the technological gap is seen to deteriorate the pro-crisis environment and hasten the collapse.

JEL-codes: E51 F31 O31 (search for similar items in EconPapers)
Date: 2004
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Persistent link: https://EconPapers.repec.org/RePEc:ris:ecoint:0138

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