Equilibrium Exchange Rates and Misalignments: The Case of Homogenous Emerging Market Economies
Christian K. Tipoy,
Marthinus Breitenbach () and
Mulatu Zerihun ()
No 713, Working Papers from Economic Research Southern Africa
We compute the exchange rate misalignment for a set of emerging economies between 1980 and 2013 using the behavioural equilibrium exchange rate definition. The real equilibrium exchange rate is constructed using a parsimonious model and estimators that are robust to cross-sectional independence and small sample size bias. We find that these countries tend to intervene to avoid real appreciation of their currencies following a rise in relative productivity, casting doubt on the Balassa-Samuelson effect. East-Asian countries have maintained their currencies at an artificially low level in order to remain competitive and boost economic growth these past years.
Keywords: equilibrium exchange rate; panel cointegration; autoregressive distributed lag (search for similar items in EconPapers)
JEL-codes: F31 C23 (search for similar items in EconPapers)
Pages: 26 pages
New Economics Papers: this item is included in nep-mon, nep-opm and nep-sea
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Working Paper: Equilibrium Exchange Rates and Misalignments: The Case of Homogenous Emerging Market Economies (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:rza:wpaper:713
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