Real exchange rate and openness in emerging economies: Argentina in the long run

Abstract

Argentina's economic policies since the beginning of the century, give an interesting background to the study of Real Exchange Rate (RER) management in emerging countries. In this article, four types of RER overvaluation are identified. In the 1920s, Argentina provides a short example of overvaluation in a context of a fixed exchange rate policy. Moreover, the estimations show that import substitution regimes can lead to a misalignment of RER. Argentina illustrates also the difficult management of RER in a volatile environment. The results allow, in addition, to better understand the failure of the trade liberalization attempts of the country and remind that successfully integrating the world economy asks for an appropriate RER policy.

Exchange rate policy and trade balance: a cointegration analysis of the Argentine experience since 1962

“…By using VAR-based cointegration tests and impulse response functions, we show that ML condition is fulfilled in the periods including fix exchange rate regime policy but not in those periods when exchange rate has shown more flexible policies. This result holds even though there have been episodes of RER overvaluation with relatively flexible exchange rate periods in the argentine economy as have shown Richaud et al (2003). Besides our results coincides with those reported by Mahmud et al (2004) for developed countries.…”

Trade efficiency and economic development: evidence from a cross country comparison

“…A consistency between exchange rates and trade policy helps to implement successfully structural economic reforms and foster economic development of the countries (Richaud et al, 2000). Observing the performance of countries we realize that Finland, Norway, Sweden and the Netherlands have the highest contribution to their GDP from trade whereas Australia, Great…”

L’approche microéconomique du taux de change réel d’équilibre : une revue de la littérature théorique

“…L'appréciation réelle induite par la baisse du prix des importations incite les agents à remplacer dans leur panier de consommation les biens non échangés par les biens importables devenus moins chers, provoquant un excès d'offre sur le marché domestique et une nécessaire dépréciation réelle pour réta-blir l'équilibre, c.-à-d. une hausse de E P ne . Néanmoins, il est généralement admis que l'effet revenu domine l'effet substitution du côté demande, ce qui implique qu'une amélioration des termes de l'échange est plus susceptible d'aboutir à une appréciation du taux de change réel d'équilibre (De Gregorio et al, 1994;Richaud et al, 2003).…”