A Panel Data Investigation Of Real Exchange Rate Misalignment And Growth
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A Panel Data Investigation Of Real Exchange Rate Misalignment And Growth
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Author : Ronald MacDonald
language : en
Publisher:
Release Date : 2010
A Panel Data Investigation Of Real Exchange Rate Misalignment And Growth written by Ronald MacDonald and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2010 with categories.
Exchange Rate Misalignment And Growth A Myth
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Author : Carlos Goncalves
language : en
Publisher: International Monetary Fund
Release Date : 2017-12-21
Exchange Rate Misalignment And Growth A Myth written by Carlos Goncalves and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2017-12-21 with Business & Economics categories.
The impact of real exchange rate movements on GDP growth is a hotly debated issue both in policy and academic circles. In this paper, we provide evidence suggesting that the association between exchange rate misalignment and growth for a broad panel of countries is very weak. Controlling for country fixed effects, time effects and initial GDP, a more depreciated currency is associated with higher growth if one does not exclude outliers. However, this positive association always vanishes after controling for the savings rate. Importantly, this applies for both a large panel of countries and for the emerging economies subsample.
Real Exchange Rate Misalignments And Growth
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Author : Ofair Razin
language : en
Publisher:
Release Date : 1997
Real Exchange Rate Misalignments And Growth written by Ofair Razin and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1997 with Economic development categories.
Real exchange rate (RER) misalignment is now a standard concept in international macroeconomic theory and policy. However, there is neither a consensus indicator of misalignment, nor an agreed upon methodology for constructing such an indicator. This paper constructs an indicator of RER misalignment for a large sample of developed and developing countries. This indicator is based on a well-structured but simple extension of an IS-LM model of an open economy. The paper then uses regression analysis to explore whether RER misalignments are related to country growth experiences. Interestingly the work finds that there are important non-linearities in the relationship. Only very high over-valuations" appear to be associated with slower economic growth, while moderate to high (but not very high) under-valuations appear to be associated with more rapid economic growth.
Long Run Exchange Rate Dynamics
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Author : Mr.Karl Friedrich Habermeier
language : en
Publisher: International Monetary Fund
Release Date : 1999-04-01
Long Run Exchange Rate Dynamics written by Mr.Karl Friedrich Habermeier and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 1999-04-01 with Business & Economics categories.
Long-run movements of real exchange rates are studied using a panel data set comprising 51 economies. The purchasing power parity hypothesis (PPP) is examined first using unit root tests. It is found that PPP does not hold for the full sample of countries, but it may hold for the advanced economies, as well as open and high-inflation economies. Using the recently developed mean group and pooled mean group estimators, the paper finds support for the Balassa-Samuelson hypothesis in both advanced and developing economies; and for the influence of shifts in the terms of trade.
Real Exchange Rate Misalignment A Panel Co Integration And Common Factor Analysis
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Author : Etienne B. Yehoue
language : en
Publisher: INTERNATIONAL MONETARY FUND
Release Date : 2005-08-01
Real Exchange Rate Misalignment A Panel Co Integration And Common Factor Analysis written by Etienne B. Yehoue and has been published by INTERNATIONAL MONETARY FUND this book supported file pdf, txt, epub, kindle and other format this book has been release on 2005-08-01 with Developing countries categories.
We combine some newly developed panel co-integration techniques and common factor analysis to analyze the behavior of the real exchange rate (RER) in a sample of 64 developing countries. We study the dynamic of the RER with its economic fundamentals: productivity, the terms of trade, openness, and government spending. We derive a number of common factors that explain the dynamic of the RER in our sample. We find that while some fundamentals such as productivity, terms of trade, and openness are strongly related to these common factors in low-income countries, no such link is found for the middle-income countries. We also derive the misalignment indices, which seem to reproduce recent episodes of overvaluation and undervaluation in a number of countries.
The Real Exchange Rate And Growth Revisited
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Author : Yanliang Miao
language : en
Publisher: International Monetary Fund
Release Date : 2010-03-01
The Real Exchange Rate And Growth Revisited written by Yanliang Miao and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2010-03-01 with Business & Economics categories.
There is good reason and much evidence to suggest that the real exchange rate matters for economic growth, but why? The "Washington Consensus" (WC) view holds that real exchange rate misalignment implies macroeconomic imbalances that are themselves bad for growth. In contrast, Rodrik (2008) argues that undervaluation relative to purchasing power parity is good for growth because it promotes the otherwise inefficiently small tradable sector. Our main result is that WC and the Rodrik views of the role of misalignment in growth are observationally equivalent for the main growth regressions he reports. There is an identification problem: Determinants of misalignment are also likely to be independent drivers of growth, and these types of growth regressions are hard-pressed to disentangle the different channels. However, we confirm that not only are overvaluations bad but undervaluations are also good for growth, a result squarely consistent with the Rodrik story but one that requires some gymnastics from the WC viewpoint.
Real Exchange Rate Misalignment And Business Cycle Fluctuations In Asia And The Pacific
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Author : Dessie Tarko Ambaw
language : en
Publisher:
Release Date : 2022
Real Exchange Rate Misalignment And Business Cycle Fluctuations In Asia And The Pacific written by Dessie Tarko Ambaw and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2022 with categories.
Real exchange rate (RER) misalignment, which is the deviation between the actual real exchange rate from its equilibrium, occurs frequently among developing economies. Studies have shown that RER misalignment may have negative economic implications, such as a reduction in economic growth, exports and export diversification, and an increased risk of currency crises and political instability. Using quarterly data for 22 sample economies from 1990 to 2018, this paper investigates the impact of RER misalignment on business cycles in Asia and the Pacific by employing a panel vector autoregression involving consumer price index (CPI) inflation, output gap, short-term interest rate, and RER misalignment. We find that RER overvaluation may lead to a reduction in CPI inflation and short-term interest rate. We also find that Asia and the Pacific is highly heterogeneous wherein the output gaps of some economies, particularly those in Southeast Asia, are more susceptible to RER misalignment shocks.
Misalignment Of Exchange Rates
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Author : Richard C. Marston
language : en
Publisher: University of Chicago Press
Release Date : 2008-04-15
Misalignment Of Exchange Rates written by Richard C. Marston and has been published by University of Chicago Press this book supported file pdf, txt, epub, kindle and other format this book has been release on 2008-04-15 with Business & Economics categories.
Economists writing on flexible exchange rates in the 1960s foresaw neither the magnitude nor the persistence of the changes in real exchange rates that have occurred in the last fifteen years. Unexpectedly large movements in relative prices have lead to sharp changes in exports and imports, disrupting normal trading relations and causing shifts in employment and output. Many of the largest changes are not equilibrium adjustments to real disturbances but represent instead sustained departures from long-run equilibrium levels, with real exchange rates remaining "misaligned" for years at a time. Contributors to Misalignment of Exchange Rates address a series of questions about misalignment. Several papers investigate the causes of misalignment and the extent to which observed movements in real exchange rates can be attributed to misalignment. These studies are conducted both empirically, through the experiences of the United States, Great Britain, Japan, and the countries of the European Monetary System, and theoretically, through models of imperfect competition. Attention is then turned to the effects of misalignment, especially on employment and production, and to detailed estimates of the effects of changes in exchange rates on several industries, including the U.S. auto industry. In response to the contention that there is significant "hysteresis" in the adjustment of employment and production to changes in exchange rates, contributors also attempt to determine whether the effects of misalignment can be reversed once exchange rates return to earlier levels. Finally, the issue of how to avoid—or at least control—misalignment through macroeconomic policy is confronted.
Real Exchange Rates Economic Complexity And Investment
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Author : Steve Brito
language : en
Publisher: International Monetary Fund
Release Date : 2018-05-10
Real Exchange Rates Economic Complexity And Investment written by Steve Brito and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2018-05-10 with Business & Economics categories.
We show that the response of firm-level investment to real exchange rate movements varies depending on the production structure of the economy. Firms in advanced economies and in emerging Asia increase investment when the domestic currency weakens, in line with the traditional Mundell-Fleming model. However, in other emerging market and developing economies, as well as some advanced economies with a low degree of structural economic complexity, corporate investment increases when the domestic currency strengthens. This result is consistent with Diaz Alejandro (1963)—in economies where capital goods are mostly imported, a stronger real exchange rate reduces investment costs for domestic firms.
Fear Of Appreciation
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Author : Eduardo Levy-Yeyati
language : en
Publisher: World Bank Publications
Release Date : 2007
Fear Of Appreciation written by Eduardo Levy-Yeyati and has been published by World Bank Publications this book supported file pdf, txt, epub, kindle and other format this book has been release on 2007 with Central Bank categories.
Abstract: In recent years the term "fear of floating" has been used to describe exchange rate regimes that, while officially flexible, in practice intervene heavily to avoid sudden or large depreciations. However, the data reveals that in most cases (and increasingly so in the 2000s) intervention has been aimed at limiting appreciations rather than depreciations, often motivated by the neo-mercantilist view of a depreciated real exchange rate as protection for domestic industries. As a first step to address the broader question of whether this view delivers on its promise, the authors examine whether this "fear of appreciation" has a positive impact on growth performance in developing economies. The authors show that depreciated exchange rates appear to induce higher growth, but that the effect, rather than through import substitution or export booms as argued by the mercantilist view, works largely through the deepening of domestic savings and capital accumulation.