When fast growing economies slow down: International evidence and implications for the People's Republic of China

Using international data starting 1957, we construct a sample of cases where fast-growing economies slow down. The evidence suggests that rapidly growing economies slow down significantly, in the sense that the growth rate downshifts by at least 2 percentage points when their per capita incomes reach around $17,000 in year-2005 constant international prices, a level that the People's Republic of China should achieve by or soon after 2015. Among our more provocative findings is that growth slowdowns are more likely in countries that maintain undervalued real exchange rates.