Exchange rate volatility and productivity growth: The role of financial development

Philippe Aghion, Philippe Bacchetta, Romain Ranciere and Kenneth Rogoff

Journal of Monetary Economics, 2009, vol. 56, issue 4, 494-513

Abstract: The vast empirical exchange rate literature finds the effect of exchange rate volatility on real activity to be small or insignificant. In contrast, this paper offers empirical evidence that real exchange rate volatility can have a significant impact on productivity growth. However, the effect depends critically on a country's level of financial development. The results appear robust to time window, alternative measures of financial development and exchange rate volatility, and outliers. We also offer a simple monetary growth model in which real exchange rate uncertainty exacerbates the negative investment effects of domestic credit market constraints.

Keywords: Exchange; rate; regime; Financial; development; and; growth (search for similar items in EconPapers)
Date: 2009
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (478)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0304-3932(09)00035-X
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Exchange rate volatility and productivity growth: The role of financial development (2009)
Working Paper: Exchange Rate Volatility and Productivity Growth: The Role of Financial Development (2009)
Working Paper: Exchange Rate Volatility and Productivity Growth: The Role of Financial Development (2006)
Working Paper: Exchange Rate Volatility and Productivity Growth: The Role of Financial Development (2006)
Working Paper: Exchange Rate Volatility and Productivity Growth: The Role of Financial Development (2006)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:moneco:v:56:y:2009:i:4:p:494-513

Access Statistics for this article

Journal of Monetary Economics is currently edited by R. G. King and C. I. Plosser

More articles in Journal of Monetary Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().