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Real Exchange Rate Misalignments and Growth

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Author Info
Ofair Razin (Georgetown University)
Susan M. Collins (Georgetown University and The Brookings Institution)
Abstract

Real exchange rate (RER) misalignment refers to a situation in which a country's actual RER deviates from some notion of an implicit "ideal" RER. An exchange rate is labeled "undervalued" when it is more depreciated than this ideal, and "overvalued" when it is more appreciated than this ideal. Such misalignments are widely believed to influence economic behavior. In particular, Overvaluation is expected to hinder economic growth while undervaluation is sometimes thought to provide an environment conducive to growth. But unless the "ideal" is explicitly specified, the concepts of RER misalignment remain subjective. The objectives of this paper are first to develop and construct explicit measures of RER misalignment, and second to explore systematically the relationships between misalignment and economic growth.

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Paper provided by EconWPA in its series International Finance with number 9707001.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length: 31 pages
Date of creation: 21 Jul 1997
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Handle: RePEc:wpa:wuwpif:9707001

Note: Type of Document - WordPerfect; prepared on IBM PC ; to print on HP; pages: 31 ; figures: included. The research presented in this paper is work that Ofair Razin completed for his doctoral dissertation. It was a pleasure to advise him in his doctoral work and to prepare this paper for publication, in his memory. This paper is forthcoming in Assaf Razin and Efraim Sadka (eds.) International Economic Integration: Public Economics Perspectives, Cambridge University Press.
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Find related papers by JEL classification:
F3 - International Economics - - International Finance
F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Susan M. Collins & Barry P. Bosworth, 1996. "Economic Growth in East Asia: Accumulation versus Assimilation," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 27(1996-2), pages 135-204. [Downloadable!]
  2. Michael Gavin & Ricardo Hausmann & Leonardo Leiderman, 1995. "Macroeconomics of Capital Flows to Latin America: Experience and Policy Issues," RES Working Papers 4012, Inter-American Development Bank, Research Department. [Downloadable!]
  3. Tamim Bayoumi & Peter B. Clark & Steven A. Symansky & Mark P. Taylor, 1994. "Robustness of Equilibrium Exchange Rate Calculations to Alternative Assumptions and Methodologies," IMF Working Papers 94/17, International Monetary Fund.
  4. John V. Leahy & Toni M. Whited, 1995. "The Effect of Uncertainty on Investment: Some Stylized Facts," NBER Working Papers 4986, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  5. Robert J. Barro, 1991. "Economic Growth in a Cross Section of Countries," NBER Working Papers 3120, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  6. repec:fth:inadeb:310 is not listed on IDEAS
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Hiroyuki Hino & Atsushi Iimi, 2008. "Aid Effectiveness Revisited: Comparative Studies of Modalities of Aid to Asia and Africa," Discussion Paper Series 218, Research Institute for Economics & Business Administration, Kobe University. [Downloadable!]
  2. Gabriel Porcile & Gilberto Tadeu Lima, 2006. "Real Exchange Rate And Elasticity Of Labor Supply In A Balance-Of-Payments-Constrained Macrodynamics," Anais do XXXIV Encontro Nacional de Economia [Proceedings of the 34th Brazilian Economics Meeting] 11, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics]. [Downloadable!]
  3. Frait, Jan & Komarek, Lubos & Meleck, Martin, 2006. "The Real Exchange Rate Misalignment in the Five Central European Countries," The Warwick Economics Research Paper Series (TWERPS) 739, University of Warwick, Department of Economics. [Downloadable!]
  4. Urban, Dieter M., 2007. "Terms of Trade, Catch-up, and Home Market Effect: The Example of Japan," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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  5. Paulo Gala & Claudio R. Lucinda, 2006. "Exchange Rate Misalignment And Growth: Old And New Econometric Evidence," Anais do XXXIV Encontro Nacional de Economia [Proceedings of the 34th Brazilian Economics Meeting] 93, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics]. [Downloadable!]
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  6. Patrick A. Imam & Camelia Minoiu, 2008. "Mauritius: A Competitiveness Assessment," IMF Working Papers 08/212, International Monetary Fund. [Downloadable!]
  7. Bagella , Michele & Becchetti , Leonardo & Hasan , Iftekhar, 2004. "The anticipated and concurring effects of EMU: exchange rate volatility, institutions and growth," Research Discussion Papers 15/2004, Bank of Finland. [Downloadable!]
  8. Olimov, Ulugbek & Sirajiddinov, Nishanbay, 2008. "The Effects of the Real Exchange Rate Volatility and Misalignments on Foreign Trade Flows in Uzbekistan," Economics Discussion Papers 2008-29, Kiel Institute for the World Economy. [Downloadable!]
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  9. Paulo Gala, 2007. "Real Exchange Rate Levels And Economic Development: Theoretical Analysis And Empirical Evidence," Anais do XXXV Encontro Nacional de Economia [Proceedings of the 35th Brazilian Economics Meeting] 037, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics]. [Downloadable!]
  10. P Mejía-Reyes & D R Osborn & M Sensier, 2004. "Modelling Real Exchange Rate Effects on Output Performance in Latin America," Centre for Growth and Business Cycle Research Discussion Paper Series 35, Economics, The Univeristy of Manchester. [Downloadable!]
  11. Chernookiy Valery, 2005. "Adjustment to the Asymmetric Shocks and Currency Unions: the Case of Belarus and Russia," EERC Working Paper Series 05-07e, EERC Research Network, Russia and CIS. [Downloadable!]
  12. Bresser-Pereira, Luiz Carlos, 2009. "A tendência à sobreapreciação da taxa de câmbio," Textos para discussão 183, Escola de Economia de São Paulo, Getulio Vargas Foundation (Brazil). [Downloadable!]
  13. Frait, Jan & Komárek, Luboš, 2008. "The Debt-adjusted Real Exchange Rate for China," The Warwick Economics Research Paper Series (TWERPS) 850, University of Warwick, Department of Economics. [Downloadable!]
  14. Paulo Gala, 2005. "Exchange Rate Policies In Latin America And Asia, A Comparative Study," Anais do XXXIII Encontro Nacional de Economia [Proceedings of the 33th Brazilian Economics Meeting] 077, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics]. [Downloadable!]
  15. Weber, Sebastian & Wyplosz, Charles, 2009. "Exchange rates during the crisis," Policy Research Working Paper Series 5059, The World Bank. [Downloadable!]
  16. Frait, Jan & Komárek, Luboš, 2002. "Theoretical And Empirical Analysis Of The Debt-Adjusted Real Exchange Rate In Selected Transition Economies During 1994-2001," The Warwick Economics Research Paper Series (TWERPS) 646, University of Warwick, Department of Economics. [Downloadable!]
  17. Christine Richaud & AristomÈne Varoudakis & Marie-Ange VÉganzonÈs, 2003. "Real exchange rate and openness in emerging economies: Argentina in the long run," Applied Economics, Taylor and Francis Journals, vol. 35(3), pages 293-303, January. [Downloadable!] (restricted)
  18. Kevin Cowan & David Rappoport & Jorge Selaive, 2007. "High Frequency Dynamics of the Exchange Rate in Chile," Working Papers Central Bank of Chile 433, Central Bank of Chile. [Downloadable!]
  19. Ildiko Magyari, 2008. "Exploring the Correlation between Real Exchange Rate Misalignment and Economic Growth in the CEE Countries," Advances in Economic and Financial Research - DOFIN Working Paper Series 16, Bucharest University of Economics, Center for Advanced Research in Finance and Banking - CARFIB. [Downloadable!]
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This page was last updated on 2009-11-13.

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