Real Exchange Rate and Economic Growth: New Empirical Evidence

Missio, Fabrício José; Jayme, Frederico G.; Britto, Gustavo; Oreiro, José Luís

doi:10.1111/meca.12087

Cited by 68 publications

(51 citation statements)

References 45 publications

(64 reference statements)

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“…According to him, this relationship does not apply to developed rich country economies. Missio et. al (2015) empirically analysed the relationship between real exchange rate and growth rate of output for a broad sample of 63 developing countries from 1978 to 2007.…”

Section: Literature Reviewmentioning

confidence: 99%

Influence of Exchange Rate on the Economic Growth in the Turkish Economy

Karahan¹

2020

FAI

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The traditional view asserts that there is a positive relationship between the foreign exchange rate and economic growth. So much so that an increase in foreign exchange rates enhances the net export volume and thus positively affects economic growth due to the increasing total demand. However, structural economists argue that there is an inverse relationship between the exchange rate and economic growth. Especially in developing countries, the input structure of production depends on imported capital and intermediate goods, so an increase in exchange rates makes import production inputs more expensive and thus negatively affects economic growth. Turkey, leaving foreign exchange rate free float since 2002, has implemented the Inflation Targeting (IT) regime as the monetary policy. Therefore, Turkey has a real experience to analyse the role of exchange rate changes on economic growth. Accordingly, in our study, using the quarterly data between 2002-Q1 and 2019-Q1, the relationship between exchange rate and economic growth was examined by employing Johansen cointegration test, Granger causality test and Innovation Accounting Techniques. Empirical findings suggest that there is a negative causal relationship between exchange rates and economic growth, as claimed by structuralist economists. In terms of policy implications, it can be argued that, even under the inflation targeting regime in Turkey, both price and exchange rate stability should be provided together.

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Section: Literature Reviewmentioning

confidence: 99%

Influence of Exchange Rate on the Economic Growth in the Turkish Economy

Karahan¹

2020

FAI

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“…manufacturing in GDP, the current account balance as a percentage of GDP, and the growth rate of the export of manufactured goods). The importance of the RER for growth and the income elasticities ratio is confirmed by Missio et al (2015) for a broad sample of 103 countries between 1978 and 2007 and by Nassif et al (2015Nassif et al ( , 2018 working with Brazilian data in the period 1980-2010. Gala (2008) highlights the differences in the management of the RER between East Asian and Latin American economies to explain the contrasting growth performance of the two regions since the '90s.…”

Section: Technology Export Diversification and The Rer: A Review Of The Empirical Evidencementioning

confidence: 73%

New Structuralism and the balance-of payments constraint

Porcile¹,

Yajima²

2021

Thirlwall's Law at 40

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“…However, several studies have put forth theoretical arguments in favour of this relationship, see studies done by Rodrik (2008), Aizenman and Lee (2010), Di Nino et al (2011), McLeod and Mileva (2011) and Glüzmann et al (2012). Whilst on the other hand, there has been a plethora of empirical literature in recent times confirming this relationship, see Aguirre and Calderón (2005), Rodrik (2008), Rapetti et al (2012), Béreau et al (2012) and Missio et al (2015). Furthermore, recent empirical literature surrounding this topic has highlighted that there exists a non-linear effect of currency or exchange rate misalignment on economic growth (see Aguirre and Calderón (2005)).…”

Section: Literature Review: the Relationship Between Real Exchange Ramentioning

confidence: 97%

Real Exchange Rate Misalignment and Economic Growth: The Case of Trinidad and Tobago

Conrad

Jagessar

2018

Economies

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Empirical studies outline developing countries’ experience economic growth through an undervalued exchange rate and that exchange rate overvaluations have negative long term effects on economic growth. This paper examined the impact of exchange rate movements as well as exchange rate misalignments on economic growth for the Trinidad and Tobago economy over the period 1960 to 2016. We find statistically significant evidence that both exchange rate appreciation and misalignments impact negatively on economic growth in the T&T economy. Drilling deeper, we find interestingly that there exist no non-linear effects of exchange rate misalignments on growth. Specifically, we find statistically significant evidence that both overvaluations and under valuations hamper economic growth in the Trinidad and Tobago economy. We attribute this to T&T’s small and underdeveloped manufacturing sector that tends to be overlooked on account of its energy resources, in addition to the fact that its manufacturing sector is highly import oriented. A major policy recommendation would be for the critical reassessment of the rules governing the Heritage and Stabilization Fund (HSF), as government expenditure was allowed to follow energy revenues due to its current limitations.

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Real Exchange Rate and Economic Growth: New Empirical Evidence

Cited by 68 publications

References 45 publications

Influence of Exchange Rate on the Economic Growth in the Turkish Economy

Influence of Exchange Rate on the Economic Growth in the Turkish Economy

New Structuralism and the balance-of payments constraint

Real Exchange Rate Misalignment and Economic Growth: The Case of Trinidad and Tobago

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