Price Competition and the Fallacy of Composition in Developing Country Exports of Manufactures: Estimates of Short-Run Growth Effects

Authors

Robert A. Blecker
Arslan Razmi, University of Massachusetts - Amherst

Working Paper Number

2005-18

Publication Date

2005

Abstract

This paper studies whether intra-developing country price competition has significant effects on the short-run growth rates of developing countries that are specialized in manufactured exports. Regression estimates using the generalized method of moments (GMM) applied to annual panel data for 17 developing countries in 1983-2004 show that these countries exhibit a “fallacy of composition,” in the sense that a real depreciation relative to competing developing country exporters increases the home country’s growth rate in the short run. The results also suggest that real depreciations for these developing countries relative to the industrialized countries are contractionary.

DOI

https://doi.org/10.7275/1069115

Recommended Citation

Blecker, Robert A. and Razmi, Arslan, "Price Competition and the Fallacy of Composition in Developing Country Exports of Manufactures: Estimates of Short-Run Growth Effects" (2005). Economics Department Working Paper Series. 54.
https://doi.org/10.7275/1069115