An analysis of impacts of currency devaluation on economic growth in Vietnam in 2000-2012

Abstract

The paper aims at exploring effects of currency devaluation on Vietnam's economic growth. Our approach is to employ smooth transition regression (STR) to estimate relationship between real exchange rate, money supply, and public expenditure with Vietnam's GDP in 2000-2012. The results show that currency devaluation can increase output if growth of money supply is less than 24.46%, and it may produce negative effects on the output when the money supply grows higher than the above threshold.