The Gregory Thesis Visits the Tropics*

Type Working Paper - Economic Record
Title The Gregory Thesis Visits the Tropics*
Author(s)
Volume 82
Issue 257
Publication (Day/Month/Year) 2006
Page numbers 177-194
URL https://crawford.anu.edu.au/acde/publications/publish/papers/wp2006/wp-econ-2006-03.pdf
Abstract
A concern about large, export-oriented projects relates to the flows of foreign exchange into the domestic economy that they produce. These flows occur both during the investment phase of the project and subsequently during its operational phase, through export earnings. Foreign exchange inflows produce direct benefits for some groups, but may also indirectly harm others, through an appreciation of the real exchange rate. These indirect outcomes, known as the ‘Gregory effect’ in Australia and as the ‘Dutch disease’ or ‘booming sector’ effect elsewhere, are studied in this paper in the context of a large infrastructure project in Laos.

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