Currency Misalignments and Exchange Rate Regimes in Emerging and Developing Countries

Virginie Coudert () and Cécile Couharde ()

Working Papers from CEPII research center

Abstract: Pegged exchange rates are often pointed out as more prone to risk of overvaluation, because their real exchange rates have a tendency to appreciate. We check this assumption empirically over a large sample of emerging and developing countries, by using two databases for de facto classifications by Levy-Yeyati and Sturzenegger (2003) and by Reinhart and Rogoff (2004). We assess currency misalignments by estimating real equilibrium exchange rates taking into account a Balassa effect and the impact of net foreign assets. Pegged currencies are shown to be more overvalued than floating ones.

Keywords: Exchange rate regimes; emerging and developing countries; misalignments (search for similar items in EconPapers)
JEL-codes: F31 F33 (search for similar items in EconPapers)
Date: 2008-04
New Economics Papers: this item is included in nep-cba, nep-ifn and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (24)

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Journal Article: Currency Misalignments and Exchange Rate Regimes in Emerging and Developing Countries* (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:cii:cepidt:2008-07

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