In a country such as China, which maintains strict controls on foreign exchange and frequently intervenes in the currency market, it is not surprising that the local currency is persistently undervalued in nominal terms. Normally, one would expect such a policy of deliberate currency...

In a country such as China, which maintains strict controls on foreign exchange and frequently intervenes in the currency market, it is not surprising that the local currency is persistently undervalued in nominal terms. Normally, one would expect such a policy of deliberate currency...

Constructing an open economy Lewisian growthmodel withth ree sectors, we analyze the relationship between economic growth and the level of absolute prices. We show that the absolute price level will not increase until the economy reaches the Lewisian turning point. In addition, we show that in...