Real exchange rate misalignment in developing countries: the role of exchange rate flexibility and capital account openness

Wishnu Mahraddika

Departmental Working Papers from The Australian National University, Arndt-Corden Department of Economics

Abstract: This paper examines the association between the real exchange rate (RER) misalignment, exchange rate flexibility, and capital account openness using a panel dataset for 60 developing countries over the period 1980 – 2014. The analysis is based on an alternative measure of RER that is more consistent with the theoretical concept of RER than the commonly used index, and misalignment estimates that account for country-specific underlying factors. The results suggest that the exchange rate regime and capital account policy are significantly related to the degree of persistence and the magnitude of RER misalignment.

Keywords: Real exchange rate; exchange rate regime; capital account openness (search for similar items in EconPapers)
JEL-codes: F31 F38 F41 O24 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2020
New Economics Papers: this item is included in nep-acc, nep-cba and nep-opm
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Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:pas:papers:2020-07

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