How to avoid exchange rate disturbances on a growth path. A joint analysis from development macroeconomics and the supermultiplier

With rare exceptions, economies that started from a backward position have been unable to join the growth track. The apparent reasons are structural deficiencies and recurrent crises in key economic variables such as exchange rates, interest rates, and inflation. “Developmental macroeconomics” tries to understand and solve these problems. One of the milestones of such a growth model is the book by Bresser-Pereira, Oreiro, and Marconi, which celebrates its 15th anniversary this year. This paper considers macroeconomic development from the perspectives of classical economics and the supermultiplier growth model. By relating it to the endogenous money hypothesis, we suggest creating an international (crypto)currency to sustain industrial growth and address problems arising from abrupt movements in exchange rates, interest rates, and inflation.