The impact of real exchange rates adjustments on global imbalances: A multilateral approach

Jean-Pierre Allegret and Audrey Sallenave

Economic Modelling, 2014, vol. 37, issue C, 149-163

Abstract: An extensive literature stresses that currency misalignments are costly in terms of growth performance. However, these studies do not consider the direct and indirect effects of currency misalignments on other countries. In this paper, we analyze how misalignments of the dollar, the euro, and the renminbi affect their respective economies and those of their trading partners using a multi-country dataset GVAR model. Our model includes 15 advanced and emerging countries and uses quarterly data spanning the period 1980–2010. We find that misalignments significantly influence the world economy. We show that overvaluation and undervaluation shocks do not produce the same effects.

Keywords: GVAR; Misalignments; Growth (search for similar items in EconPapers)
JEL-codes: F31 F41 F43 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Working Paper: The impact of real exchange rates adjustments on global imbalances: a multilateral approach (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:37:y:2014:i:c:p:149-163

DOI: 10.1016/j.econmod.2013.10.022

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