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Exchange Rate Misalignment and Growth: A Myth?

2017-12-21 Business & Economics
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Release : 2017-12-21
Genre : Business & Economics
Kind : eBook
Book Rating : 02X/5 ( reviews)

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Book Synopsis Exchange Rate Misalignment and Growth: A Myth? by : Carlos Goncalves

Download or read book Exchange Rate Misalignment and Growth: A Myth? written by Carlos Goncalves. This book was released on 2017-12-21. Available in PDF, EPUB and Kindle. Book excerpt: 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.

When and Why Worry About Real Exchange Rate Appreciation? The Missing Link Between Dutch Disease and Growth

2010-12-01 Business & Economics
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Release : 2010-12-01
Genre : Business & Economics
Kind : eBook
Book Rating : 781/5 ( reviews)

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Book Synopsis When and Why Worry About Real Exchange Rate Appreciation? The Missing Link Between Dutch Disease and Growth by : International Monetary Fund

Download or read book When and Why Worry About Real Exchange Rate Appreciation? The Missing Link Between Dutch Disease and Growth written by International Monetary Fund. This book was released on 2010-12-01. Available in PDF, EPUB and Kindle. Book excerpt: We review the literature on Dutch disease, and document that shocks that trigger foreign exchange inflows (such as natural resource booms, surges in foreign aid, remittances, or capital inflows) appreciate the real exchange rate, generate factor reallocation, and reduce manufacturing output and net exports. We also observe that real exchange rate misalignment due to overvaluation and higher volatility of the real exchange rate lower growth. Regarding the effect of undervaluation of the exchange rate on economic growth, the evidence is mixed and inconclusive. However, there is no evidence in the literature that Dutch disease reduces overall economic growth. Policy responses should aim at adequately managing the boom and the risks associated with it.

Revisiting the Real Exchange Rate Misalignment-economic Growth Nexus Via the Across-sector Misallocation Channel

2022
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Release : 2022
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Book Synopsis Revisiting the Real Exchange Rate Misalignment-economic Growth Nexus Via the Across-sector Misallocation Channel by : Claire GIORDANO

Download or read book Revisiting the Real Exchange Rate Misalignment-economic Growth Nexus Via the Across-sector Misallocation Channel written by Claire GIORDANO. This book was released on 2022. Available in PDF, EPUB and Kindle. Book excerpt:

Correcting Real Exchange Rate Misalignment

2012
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Release : 2012
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Book Synopsis Correcting Real Exchange Rate Misalignment by : Ha Nguyen

Download or read book Correcting Real Exchange Rate Misalignment written by Ha Nguyen. This book was released on 2012. Available in PDF, EPUB and Kindle. Book excerpt:

Exchange Rate Misalignments, Growth, and Institutions

2020
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Release : 2020
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Book Synopsis Exchange Rate Misalignments, Growth, and Institutions by : Jaromír Baxa

Download or read book Exchange Rate Misalignments, Growth, and Institutions written by Jaromír Baxa. This book was released on 2020. Available in PDF, EPUB and Kindle. Book excerpt: In this paper, we revisit the relationship between economic growth and exchange rate misalignments, especially undervaluations. In particular, we ask which countries benefit from undervaluations at most, and whether the impact of undervaluations on growth depends on institutional quality as suggested in previous literature. First, we separate countries into groups according to their institutional quality using the cluster analysis. Then, we estimate the relationship between growth and exchange rate misalignment while allowing for variation in coefficients across these clusters. Our results confirm the positive relationship between undervaluation and growth, and this relationship is the highest for countries with the highest quality of institutions rather than with a poor level of institutional quality. Therefore, our results reconcile the importance of good institutions and do not support the hopes that the countries can compensate for the poor institutional quality via undervaluation of currencies successfully.

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