Like other types of pollution, this does not enter standard accounting of market costs, being conceived as externalities for which the market can not account.
They develop a model showing that foreign reserve accumulation by currency under-devaluation could be a second-best policy in economies with learning-by-investing externality.
Market failure occurs when an externality is present and a market will either under-produce a product with a positive externalization or overproduce a product that generates a negative externalization.
