Real Exchange Rate Misalignments and Growth / Ofair Razin, Susan M. Collins.

Format:

Book

Author/Creator:

Razin, Ofair.

Contributor:

National Bureau of Economic Research.

Collins, Susan M.

Series:

Working Paper Series (National Bureau of Economic Research) no. w6174.

NBER working paper series no. w6174

Language:

English

Subjects (All):

Foreign exchange rates--Econometric models.

Foreign exchange rates.

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1997.

Cambridge, Mass. : National Bureau of Economic Research, 1997.

Summary:

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.

Notes:

Print version record

September 1997.

Includes bibliographical references.