IDEAS home Printed from https://ideas.repec.org/p/hal/journl/hal-01367466.html
   My bibliography  Save this paper

Exchange rate misalignments and economic growth: a threshold panel approach

Author

Listed:
  • Jacques Mazier

    (CEPN - Centre d'Economie de l'Université Paris Nord - UP13 - Université Paris 13 - USPC - Université Sorbonne Paris Cité - CNRS - Centre National de la Recherche Scientifique)

  • Nabil Aflouk

Abstract

This study deals with the link between exchange rate misalignments (ERM) and economic growth, for a large sample of advanced and emerging economies on the period 1982-2010. The estimation of equilibrium exchange rate (EER) is based on a FEER approach. The relation "misalignments-growth" is estimated using a PSTR (Panel Smooth Transition Regression) and GMM models. Our main results show that the impact of ERM on economic growth is nonlinear and asymmetric. An overvaluation has a negative impact on growth while an undervaluation sustains growth until an estimated threshold (15.5% for emerging countries and 9% for developed countries). The coefficient is weaker for emerging countries (0.02) than for developed countries (0.08). Due to non linearity and coefficient's value, the undervaluation has a positive effect on growth even beyond the threshold. We also demonstrate that the impact of ERM on growth is positive only in the case of small undervaluation for emerging countries. However, concerning developed countries, the undervaluation have a positive effect on growth even beyond the estimated threshold.

Suggested Citation

  • Jacques Mazier & Nabil Aflouk, 2013. "Exchange rate misalignments and economic growth: a threshold panel approach," Post-Print hal-01367466, HAL.
    • Handle: RePEc:hal:journl:hal-01367466
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Florian Morvillier, 2019. "Do currency undervaluations affect the impact of inflation on growth?," Post-Print hal-02138677, HAL.
    2. Nabil Alimi & Nabil Aflouk, 2017. "The threshold effect of oil-price shocks on economic growth," Economics Bulletin, AccessEcon, vol. 37(3), pages 1942-1958.
    3. Morvillier, Florian, 2020. "Do currency undervaluations affect the impact of inflation on growth?," Economic Modelling, Elsevier, vol. 84(C), pages 275-292.
    4. Florian Morvillier, 2018. "The role of exchange rate undervaluations on the inflation-growth nexus," EconomiX Working Papers 2018-15, University of Paris Nanterre, EconomiX.
    5. Grekou, Carl, 2015. "Revisiting the nexus between currency misalignments and growth in the CFA Zone," Economic Modelling, Elsevier, vol. 45(C), pages 142-154.
    6. Carl Grekou, 2014. "Revisiting the nexus between currency misalignments and growth in the CFA Zone," Working Papers hal-04141364, HAL.
    7. Ramos-Herrera María del Carmen, 2022. "How Equilibrium Exchange Rate Misalignments Influence on Economic Growth? Evidence for European Countries," Economics - The Open-Access, Open-Assessment Journal, De Gruyter, vol. 16(1), pages 199-211, January.
    8. DEGUENONVO, Cédric, 2017. "Real exchange rate misalignment in Senegal: effect on growth," MPRA Paper 84338, University Library of Munich, Germany.
    9. Florian Morvillier, 2018. "The role of exchange rate undervaluations on the inflation-growth nexus," Working Papers hal-04141804, HAL.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hal:journl:hal-01367466. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.