Real Exchange Rate Misalignments And Growth
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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.
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 Growth
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Author : Ofair Razin
language : en
Publisher:
Release Date : 1997
Real Exchange Rate Misalignment 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 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.
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.
Assessing Real Exchange Rate Misalignments
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Author : Megumi Kubota
language : en
Publisher:
Release Date : 2011
Assessing Real Exchange Rate Misalignments written by Megumi Kubota and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2011 with categories.
Growth Collapses Real Exchange Rate Misalignments And Exchange Rate Policy In 21 Developing Countries
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Author : Deepak Lal
language : en
Publisher:
Release Date : 1990
Growth Collapses Real Exchange Rate Misalignments And Exchange Rate Policy In 21 Developing Countries written by Deepak Lal and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1990 with Economics categories.
Exchange Rate Misalignment
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Author : Lawrence E. Hinkle
language : en
Publisher: World Bank Publications
Release Date : 1999
Exchange Rate Misalignment written by Lawrence E. Hinkle 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 1999 with Business & Economics categories.
The study cautiously identifies exchange rate misalignment as an important element in most of the exchange rate crises that plagued the developing world during the last decade. Given that the increasing integration of world capital markets, has escalated the costs of such crises, a broad consensus emerged in recent years, that the overriding objective of exchange rate policy in developing countries, should be to avoid episodes of prolonged, and substantial misalignment, i.e., situations in which the actual real exchange rate differs significantly from its long-run equilibrium value. It was the Bank's involvement in one such misalignment episode, that eventually led to this book. Following an overview on the concepts and measurement of exchange rate misalignment, its impact on the purchasing power parity, and the relationship between the external real exchange rate (RER), and the two-good internal RER for tradables non-tradables, the study presents methodologies - empirical applications - for estimating the RER equilibrium. The study reaches an optimistic conclusion - that enough is known to identify cases of misalignment, and be able to sound clear warning signals. The implication for exchange rate policy is that ignorance about the empirical value of the equilibrium exchange rate, cannot be used to clinch arguments for extreme exchange arrangements, such as clean floats, currency boards, and "dollarization."
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.
Revisiting The Real Exchange Rate Misalignment Economic Growth Nexus Via The Across Sector Misallocation Channel
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Author : Claire Giordano
language : en
Publisher:
Release Date : 2022
Revisiting The Real Exchange Rate Misalignment Economic Growth Nexus Via The Across Sector Misallocation Channel written by Claire Giordano 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.