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Exchange rate regimes, structural change and capital mobility in a developing economy

Stefan Wilson D'Amato and Luciano Dias de Carvalho

Revista CEPAL, 2021

Abstract: This paper proposes to develop a balance-of-payments-constrained growth model to analyse the importance of the relationship between real exchange rate misalignment and the share of industry in output. Building on the work of Gabriel, Jayme and Oreiro (2016), the model is expanded to address: (i) the influence of price competitiveness on net exports; (ii) capital mobility; (iii) nominal exchange rate flexibility; (iv) the nominal wage as a fraction of the value of labour productivity; and (v) a quadratic relationship between the growth rate of the share of industry in output and exchange-rate misalignment. An important result is that both flexible and fixed exchange rate regimes are compatible with a balanced growth path.

Keywords: POLITICA MONETARIA; TIPOS DE CAMBIO; MOVIMIENTOS DE CAPITAL; SECTOR INDUSTRIAL; PRODUCTO INTERNO BRUTO; CRECIMIENTO ECONOMICO; PAISES EN DESARROLLO; MONETARY POLICY; FOREIGN EXCHANGE RATES; CAPITAL MOVEMENTS; INDUSTRIAL SECTOR; GROSS DOMESTIC PRODUCT; ECONOMIC GROWTH; DEVELOPING COUNTRIES (search for similar items in EconPapers)
JEL-codes: E12 E22 E51 (search for similar items in EconPapers)
Date: 2021-12
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