Exchange Rate Misalignment and Growth: A Myth?

Carlos Eduardo Gonçalves () and Mauro Rodrigues
Authors registered in the RePEc Author Service: Carlos Eduardo Goncalves

No 2017_07, Working Papers, Department of Economics from University of São Paulo (FEA-USP)

Abstract: The impact of real exchange rate movements on GDP growth is a hotly debated issue both in policy and academic circles. In this paper we provide evidence suggesting that there is not a robust statistical association between misalignment and growth for a broad panel of countries. Controlling for country fixed effects, time effects and initial GDP, a more depreciated currency is associated with higher growth. However, this positive association vanishes after controlling for the savings rate. We do not find such positive relationship either for large panel of countries or for a subsample of emerging economies.

Keywords: Real exchange rate; growth; misalignment (search for similar items in EconPapers)
JEL-codes: F31 F43 O47 (search for similar items in EconPapers)
Date: 2017-04-27
New Economics Papers: this item is included in nep-gro and nep-opm
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Citations: View citations in EconPapers (11)

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Working Paper: Exchange Rate Misalignment and Growth: A Myth? (2017)
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