Relationship between the misalignment of the real exchange rate and capital flight in the developing countries

Abdessalem Gouider and Ridha Nouira
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Abdessalem Gouider: URECA, University of Sfax, Tunisia
Ridha Nouira: UREP, University of Sfax, Tunisia

Theoretical and Applied Economics, 2014, vol. XXI, issue 11(600), 121-140

Abstract: The objective of this work is to determine the role of the misalignment of the real exchange rate in capital flight for a sample of developing countries over the period 1980-2010. Firstly, we calculated the degrees of misalignment for all countries of our sample, which degrees were introduced as a determinant of capital flight. Then, we examined the effect of the overvaluation and the undervaluation on capital flight. The results show that a strong undervaluation may discourage capital flight, while a strong overvaluation can stimulate it.

Keywords: capital flight; equilibrium real exchange rate; overvaluation; undervaluation; cointegration. (search for similar items in EconPapers)
Date: 2014
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