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"International Crowding Out": Concept and Policy Implications

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  • H. Peter Gray

Abstract

The overvaluation of a currency "crowds out" the tradeable goods industries of the country and enhances the profit rates of foreign competitors. This asymmetry can bring about long-term changes in the competitiveness of the country's tradable goods industries, as for eign firms are able to use the quasirents to increase market share through aggressive promotion and large-scale investment in plant, product design, and personnel. The economic costs of an overvalued currency exceed those recognized by Martin Feldstein and the Reagan Administration.

Suggested Citation

  • H. Peter Gray, 1987. ""International Crowding Out": Concept and Policy Implications," Eastern Economic Journal, Eastern Economic Association, vol. 13(3), pages 193-203, Jul-Sep.
    • Handle: RePEc:eej:eeconj:v:13:y:1987:i:3:p:193-203
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    References listed on IDEAS

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    1. Gray, Jean M. & Gray, H. Peter, 1981. "The multinational bank: A financial MNC?," Journal of Banking & Finance, Elsevier, vol. 5(1), pages 33-63, March.
    2. Evans, Paul, 1985. "Do Large Deficits Produce High Interest Rates?," American Economic Review, American Economic Association, vol. 75(1), pages 68-87, March.
    3. H. Peter Gray, 1974. "An Aggregate Theory of International Payments Adjustment," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-349-01768-3, October.
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