Going under to stay on top: How much real exchange rate undervaluation is needed to boost growth in developing countries
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1 juin 2018
- handle: 10670/1.zck8zx
Ce document est lié à :
10.4067/S0718-52862018000100005
info:eu-repo/semantics/openAccess
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Cecilia Bermúdez et al., « Going under to stay on top: How much real exchange rate undervaluation is needed to boost growth in developing countries », Estudios de economía, ID : 10670/1.zck8zx
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Résumé
: This paper explores the real exchange rate (RER)-economic growth relationship for a wide sample of countries over the period 1960-2009. After removing influential observations, the system-GMM estimates suggest a positive link between an undervalued RER and growth in non-industrial countries, particularly in those with upper-middle and high income levels. In turn, RER volatility is found harmful for growth. These results holds when testing for asymmetric effects of RER misalignment: a real undervaluation boosts growth in non-industrial countries, while overvaluation seems to have no effects at any income level. Besides, the magnitude of the misalignment is also relevant: an undervalued RER of about 26% on average has a positive impact on growth.