On the long-run determinants of real exchange rates for developing countries: Evidence from Africa, Latin America and Asia

Imed Drine () and Christophe Rault

William Davidson Institute Working Papers Series from William Davidson Institute at the University of Michigan

Abstract: The main goal of this paper is to tackle the empirical issues of the real exchange rate litterature by applying recently developed panel cointegration techniques to a structural long-run real exchange rate equation. We consider here a sample of 45 developing countries, divided into three groups according to geographical criteria: Africa, Latin America and Asia. Our investigations confirm that having a reference to assess the degree of distortion of real exchange rate is not as simple as it can be thought with the PPP concept. The real exchange rate is e?ectively at the centre of an economic spiral and its value depends on the economic specificities of each country. In other words, we don’t have a fixed and general norm but, for each economy, the real exchange rate trajectory depends on its development level, on the way economic policy is conducted, and on its position on the international market.

Keywords: Real exchange rate; Developing country (search for similar items in EconPapers)
JEL-codes: C15 E31 F0 F31 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2003-05-08
New Economics Papers: this item is included in nep-afr, nep-dev, nep-fin and nep-ifn
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

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Working Paper: On the long-run determinants of real exchange rates for developing countries: Evidence from Africa, Latin America and Asia (2004)
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