Economic Growth and Stationarity of Real Exchange Rates
Author | : Yin-Wong Cheung |
Publisher | : |
Total Pages | : 30 |
Release | : 1998 |
Genre | : Asia |
ISBN | : |
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Author | : Yin-Wong Cheung |
Publisher | : |
Total Pages | : 30 |
Release | : 1998 |
Genre | : Asia |
ISBN | : |
Author | : Takatoshi Ito |
Publisher | : University of Chicago Press |
Total Pages | : 466 |
Release | : 2007-12-01 |
Genre | : Business & Economics |
ISBN | : 0226386937 |
The exchange rate is a crucial variable linking a nation's domestic economy to the international market. Thus choice of an exchange rate regime is a central component in the economic policy of developing countries and a key factor affecting economic growth. Historically, most developing nations have employed strict exchange rate controls and heavy protection of domestic industry-policies now thought to be at odds with sustainable and desirable rates of economic growth. By contrast, many East Asian nations maintained exchange rate regimes designed to achieve an attractive climate for exports and an "outer-oriented" development strategy. The result has been rapid and consistent economic growth over the past few decades. Changes in Exchange Rates in Rapidly Developing Countries explores the impact of such diverse exchange control regimes in both historical and regional contexts, focusing particular attention on East Asia. This comprehensive, carefully researched volume will surely become a standard reference for scholars and policymakers.
Author | : Muluken Nigussie Tessema |
Publisher | : GRIN Verlag |
Total Pages | : 81 |
Release | : 2020-04-08 |
Genre | : Business & Economics |
ISBN | : 334614514X |
Master's Thesis from the year 2016 in the subject Business economics - General, grade: 3.68, Saint Mary's University, language: English, abstract: This study attempts to investigate the effect of exchange rates on economic growth in Ethiopia using annual time series data spanning from 1985/86 to 2014/15. The explanatory variables in this study were real effective exchange rate, government final consumption expenditure, gross fixed capital formation, broad money supply and trade openness. The multilateral real exchange rates is used to measure real exchange rates. Results from Vector Error Correction Model revealed that real effective exchange rates, broad money supply and trade openness have a positive long run effect on economic growth, while government final consumption have a negative long run effect on the economic growth of Ethiopia. From the regression results, it was noted that undervaluation of the currency is contractionary in the long run and neutral in the short- run. As such, the effect of exchange rates on economic growth works through the supply channel. It is the reflection of various economic and policy shocks, mainly a strategy shifts, of the government. Based on the findings of this study, the researcher recommended that since the Ethiopian output is dominated by primary agricultural products and it is insensitive for the change in exchange rate. Government intervention is needed to balance the adverse effect of exchange rate movements until the economy well transformed from agricultural lead economy to industrial lead economy and becomes less dependent on imported raw materials.
Author | : Jerome L. Stein |
Publisher | : Oxford University Press |
Total Pages | : 276 |
Release | : 1997 |
Genre | : Business & Economics |
ISBN | : 9780198293064 |
"This book greatly enhances our understanding of the behavior of real exchange rates. It provides an elegant model based on a solid theoretical foundation that links real exchange rates to their fundamental economic determinants and takes proper account of stock and flow considerations. The authors provide a masterful account of how changes in productivity and thrift affect the real exchange rate, and show that the long-run impact depends crucially on whether the change reflects the former fundamental (investment) or the latter (consumption). The empirical implementation uses state-of-the-art cointegration and error correction methodologies that are eminently well suited to capture the short-run adjustment of the real exchange rate to its medium- to long-run equilibrium value. The empirical results are extremely encouraging, as the economic fundamentals identified by the authors can explain a substantial part of the movement in the real exchange rate of a number of countries."--Peter Clark, International Monetary Fund
Author | : Mr.Hamid Faruqee |
Publisher | : International Monetary Fund |
Total Pages | : 40 |
Release | : 1994-08-01 |
Genre | : Business & Economics |
ISBN | : 1451851359 |
This paper examines the long-run determinants of the real exchange rate from a stock-flow perspective. The empirical analysis estimates a long-run relationship between the real exchange rate, net foreign assets and other factors affecting trade flows. Using postwar data for the United States and Japan, cointegration analysis supports the finding that the structural factors underlying each country’s net trade and net foreign asset positions determine the long-run path for the real value of the dollar and the yen. The empirical analysis also provides estimates for the underlying stochastic trend in each real exchange rate series.
Author | : Sven-Morten Mentzel |
Publisher | : Springer Science & Business Media |
Total Pages | : 114 |
Release | : 2012-12-06 |
Genre | : Business & Economics |
ISBN | : 3642590179 |
One aim of this book is to examine the causes of fluctuations in the mark/dollar, pound/dollar, and yen/dollar real exchange rates for the period 1972-1994 with quarterly data to determine appropriate policy recommendations to reduce these movements. A second aim is to investigate whether the three real exchange rates are covariance-stationary or not and to which extent they are covariance-stationary, respectively. These aims are reached by using a two-country overshooting model for real exchange rates with real government expenditure and by applying Johansen's maximum likelihood cointegration procedure and a factor model of Gonzalo and Granger to this model.
Author | : Amirdha Vasani Sankarkumar |
Publisher | : |
Total Pages | : 0 |
Release | : 2020 |
Genre | : |
ISBN | : |
This article studies a near relationship between the real exchange rate and economic growth in India, for the period from Q1 2005 to Q4 2017, by considering the variables such as Nominal Exchange Rate, Consumer Price Index, Balance of Payments, Exports, Foreign Exchange Reserves, Gross Domestic Product, Imports, Inflation, International Reserves and Money Supply. This study used the Johansen cointegration test, Granger Causality and ADF stationary tests, for the purpose of analysis. The study found that Real Exchange Rate did have a linear relationship with all the variables of Economic Growth, except Balance of Payments and Inflation. Granger Causality Test revealed that the Real Exchange Rate recorded unidirectional relationship with Exports, Foreign Exchange Reserves and Money Supply. There was long-run relationship between Real Exchange Rate and Economic Growth. Hence, the policy makers in India should pay special attention to these variables, in order to devise appropriate policy, for the economic growth of India in the long run.
Author | : Yanliang Miao |
Publisher | : International Monetary Fund |
Total Pages | : 26 |
Release | : 2010-03-01 |
Genre | : Business & Economics |
ISBN | : 1451963750 |
There is good reason and much evidence to suggest that the real exchange rate matters for economic growth, but why? The "Washington Consensus" (WC) view holds that real exchange rate misalignment implies macroeconomic imbalances that are themselves bad for growth. In contrast, Rodrik (2008) argues that undervaluation relative to purchasing power parity is good for growth because it promotes the otherwise inefficiently small tradable sector. Our main result is that WC and the Rodrik views of the role of misalignment in growth are observationally equivalent for the main growth regressions he reports. There is an identification problem: Determinants of misalignment are also likely to be independent drivers of growth, and these types of growth regressions are hard-pressed to disentangle the different channels. However, we confirm that not only are overvaluations bad but undervaluations are also good for growth, a result squarely consistent with the Rodrik story but one that requires some gymnastics from the WC viewpoint.
Author | : Peter J. Montiel |
Publisher | : World Bank Publications |
Total Pages | : 36 |
Release | : 2008 |
Genre | : Currencies and Exchange Rates |
ISBN | : |
Abstract: The view that policies directed at the real exchange rate can have an important effect on economic growth has been gaining adherents in recent years. Unlike the traditional "misalignment" view that temporary departures of the real exchange rate from its equilibrium level harm growth by distorting a key relative price in the economy, the recent literature stresses the growth effects of the equilibrium real exchange rate itself, with the claim being that a depreciated equilibrium real exchange rate promotes economic growth. While there is no consensus on the precise channels through which this effect is generated, an increasingly common view in policy circles points to saving as the channel of transmission, with the claim that a depreciated real exchange rate raises the domestic saving rate - which in turn stimulates growth by increasing the rate of capital accumulation. This paper offers a preliminary exploration of this claim. Drawing from standard analytical models, stylized facts on saving and real exchange rates, and existing empirical research on saving determinants, the paper assesses the link between the real exchange rate and saving. Overall, the conclusion is that saving is unlikely to provide the mechanism through which the real exchange rate affects growth.
Author | : Toshiki Kanamori |
Publisher | : |
Total Pages | : 156 |
Release | : 2006 |
Genre | : Currency question |
ISBN | : |