ROLE OF THE FIXED EXCHANGE RATE REGIME IN DEVELOPING COUNTRIES (THE CASE OF CHINA)

Miloš Todorović, Jelena Mladenović

DOI Number
-
First page
561
Last page
583

Abstract


The subject of this paper is determining role of the fixed exchange rate regime in developing countries, through the analysis of the Chinese exchange rate, and its repercussions on the balance of goods and services and the economic growth in the period from 1983 to 2014. The aim of the paper is to identify the economic growth environment of China by analysing three types of relationships: the relationship between exchange rate and exports of goods and services, relationship between exports of goods and services and gross domestic product, and relationship between exchange rate and growth rate of gross domestic product. The research conducted in this work confirms great importance of the fixed exchange rate regime in developing countries for reducing the economic development gap in relation to developed countries. Based on the research results, the work recommends coordinated action of monetary and fiscal policies, as a measure through which exchange rate policy could stimulate economic growth, while discouraging inflationary tendencies in the economy.


Keywords

economic growth, exchange rate, export, international trade.

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