Going under to stay on top: How much real exchange rate undervaluation is needed to boost growth in developing countries

Abstract: 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 countrie...

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Autores principales:	Bermúdez,Cecilia, Dabús,Carlos
Lenguaje:	English
Publicado:	Universidad de Chile. Departamento de Economía 2018
Materias:	Economic growth real exchange rate exchange rate volatility non-industrial countries
Acceso en línea:	http://www.scielo.cl/scielo.php?script=sci_arttext&pid=S0718-52862018000100005
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spelling	oai:scielo:S0718-528620180001000052018-07-12Going under to stay on top: How much real exchange rate undervaluation is needed to boost growth in developing countriesBermúdez,CeciliaDabús,Carlos Economic growth real exchange rate exchange rate volatility non-industrial countries Abstract: 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.info:eu-repo/semantics/openAccessUniversidad de Chile. Departamento de EconomíaEstudios de economía v.45 n.1 20182018-06-01text/htmlhttp://www.scielo.cl/scielo.php?script=sci_arttext&pid=S0718-52862018000100005en10.4067/S0718-52862018000100005
institution	Scielo Chile
collection	Scielo Chile
language	English
topic	Economic growth real exchange rate exchange rate volatility non-industrial countries
spellingShingle	Economic growth real exchange rate exchange rate volatility non-industrial countries Bermúdez,Cecilia Dabús,Carlos Going under to stay on top: How much real exchange rate undervaluation is needed to boost growth in developing countries
description	Abstract: 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.
author	Bermúdez,Cecilia Dabús,Carlos
author_facet	Bermúdez,Cecilia Dabús,Carlos
author_sort	Bermúdez,Cecilia
title	Going under to stay on top: How much real exchange rate undervaluation is needed to boost growth in developing countries
title_short	Going under to stay on top: How much real exchange rate undervaluation is needed to boost growth in developing countries
title_full	Going under to stay on top: How much real exchange rate undervaluation is needed to boost growth in developing countries
title_fullStr	Going under to stay on top: How much real exchange rate undervaluation is needed to boost growth in developing countries
title_full_unstemmed	Going under to stay on top: How much real exchange rate undervaluation is needed to boost growth in developing countries
title_sort	going under to stay on top: how much real exchange rate undervaluation is needed to boost growth in developing countries
publisher	Universidad de Chile. Departamento de Economía
publishDate	2018
url	http://www.scielo.cl/scielo.php?script=sci_arttext&pid=S0718-52862018000100005
work_keys_str_mv	AT bermudezcecilia goingundertostayontophowmuchrealexchangerateundervaluationisneededtoboostgrowthindevelopingcountries AT dabuscarlos goingundertostayontophowmuchrealexchangerateundervaluationisneededtoboostgrowthindevelopingcountries
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Going under to stay on top: How much real exchange rate undervaluation is needed to boost growth in developing countries

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