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Bermúdez, Cecilia [Author]; Dabús, Carlos [Author]

Going under to stay on top

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  • Media type: E-Article
  • Title: Going under to stay on top : how much real exchange rate undervaluation is needed to boost growth in developing countries
  • Parallel title: Bajando para permanecer en la cima : Cuánta subvaluación del tipo de cambio real se necesita para impulsar el crecimiento de las economías en desarrollo
  • Contributor: Bermúdez, Cecilia [Author]; Dabús, Carlos [Author]
  • Published: June 2018
  • Published in: Estudios de economía ; 45(2018), 1 vom: Juni, Seite 5-28
  • Language: English
  • Identifier:
  • Keywords: Economic growth ; real exchange rate ; exchange rate volatility ; non-industrial countries ; Aufsatz in Zeitschrift
  • Origination:
  • Footnote: Zusammenfassung in spanischer Sprache
  • Description: 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.
  • Access State: Open Access