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The real effective exchange rate and deforestation

Author

Listed:
  • Jean-Louis ARCAND

  • Patrick GUILLAUMONT

    (Centre d'Etudes et de Recherches sur le Développement International(CERDI))

  • Sylviane GUILLAUMONT JEANNENEY

    (Centre d'Etudes et de Recherches sur le Développement International(CERDI))

Abstract

Based on an annual sample of 122 countries over the 1963-1994 period, this paper shows that real exchange rate depreciation reduces deforestation in relatively developed countries (with GDP per capita greater than $900) whereas it has the opposite effect in poor countries. A possible explanation for this result lies in the hypothesis that variations in the real exchange rate are perceived as being transitory in LDCs, given its high degree of instability in these countries. Our empirical results suggests that macroeconomic policy is a potentially important determinant of environmental outcomes.

Suggested Citation

  • Jean-Louis ARCAND & Patrick GUILLAUMONT & Sylviane GUILLAUMONT JEANNENEY, 2002. "The real effective exchange rate and deforestation," Working Papers 200213, CERDI.
    • Handle: RePEc:cdi:wpaper:178
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    References listed on IDEAS

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    1. Bhattarai, Madhusudan & Hammig, Michael, 2001. "Institutions and the Environmental Kuznets Curve for Deforestation: A Crosscountry Analysis for Latin America, Africa and Asia," World Development, Elsevier, vol. 29(6), pages 995-1010, June.
    2. Templeton, Scott R. & Scherr, Sara J., 1999. "Effects of Demographic and Related Microeconomic Change on Land Quality in Hills and Mountains of Developing Countries," World Development, Elsevier, vol. 27(6), pages 903-918, June.
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