Real Exchange Rates, Trade, and Growth: Italy 1861-2011

Nino, Virginia Di; Eichengreen, Barry; Sbracia, Massimo

doi:10.2139/ssrn.2236718

Cited by 74 publications

(37 citation statements)

References 85 publications

(151 reference statements)

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“…This study reveals that positive growth of official exchange rate negatively affects the RMG export growth of Bangladesh. Evidence supports that weak currency or lower exchange rate and economic growth are positively related to each other (Di Nino, Eichengreen, & Sbracia, 2011). This study shows that positive growth of inflation rate negatively affects the RMG export growth.…”

Section: Discussionsupporting

confidence: 66%

Impacts of Macro Economic Variables on the RMG Export Growth of Bangladesh

Shimu¹,

Islam²

2018

Economics and Business

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The ready-made garments (RMG) sector of Bangladesh is considered as a key driver for the Bangladeshi Economy. This paper tries to examine the impacts of macroeconomic variables on the RMG export growth of this country. For this purpose, secondary data was collected from various sources. Multiple linear regression model was applied to measure the effects of macroeconomic variables on the RMG export growth. Trade Entropy and the Competitiveness Index were applied to understand the status of RMG sector in the world market. After that, to check the accuracy of the regression model, three types of econometric problems were tested in this study. Firstly, heteroscedasticity problem was tested by graphical presentation. Secondly, auto-correlation problem was tested by Durbin Watson test. Thirdly, multicollinearity problem was tested by correlation matrix and Variance Influence Factor (VIF). The empirical results show that for every unit increase of the growth rate of official exchange rate, inflation rate, real interest rate, and female unemployment rate; the growth rate of RMG export decreases by 1.159, 0.055, 0.034, and 0.068 units, respectively.

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Section: Discussionsupporting

confidence: 66%

Impacts of Macro Economic Variables on the RMG Export Growth of Bangladesh

Shimu¹,

Islam²

2018

Economics and Business

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“…Here we argue for the opposite channel: a capital in ‡ow shock appreciates the real exchange rate, and we want to test is this appreciation reduces growth. 14 We also split countries according to whether they have negative or positive net foreign asset positions, using the data of Lane and Shambaugh (2010) and Benetrix et al (2015) (not reported for brevity). It can…”

Section: The Empirical Modelmentioning

confidence: 99%

The real exchange rate and economic growth: Revisiting the case using external instruments

Habib

Mileva

Stracca

2017

Journal of International Money and Finance

132

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The real exchange rate and economic growth: revisiting the case using external instruments ECB Working Paper, No. 1921 Provided in Cooperation with: European Central Bank (ECB)Suggested Citation: Habib, Maurizio Michael; Mileva, Elitza; Stracca, Livio (2016) : The real exchange rate and economic growth: revisiting the case using external instruments, ECB Working Paper, No. 1921, ISBN 978-92-899-2169 www.econstor.eu Working Paper SeriesThe real exchange rate and economic growth: revisiting the case using external instruments AbstractWe investigate the impact of movements in the real exchange rate on economic growth based on …ve-year average data for a panel of over 150 countries in the post Bretton Woods period. Unlike previous literature, we use external instruments to deal with possible reverse causality from growth to the real exchange rate. Our country-speci…c instruments are (i) global capital ‡ows interacted with individual countries' …nancial openness and (ii) the growth rate of o¢ cial reserves. We …nd that a real appreciation (depreciation) reduces (raises) signi…cantly annual real GDP growth, more than in previous estimates in the literature. However, our results con…rm this e¤ect only for developing countries and for pegs. Non-technical summaryThis paper takes another look at the effect of the real exchange rate on economic growth per capita from a medium term perspective, which is a question still unsettled in the literature following previous work by Rodrik (2008) and others. Its main contribution to the literature is in the identification strategy based on instrumental variables (IV). We aim at identifying exogenous movements in the real exchange rate, notably movements that are not driven by country-specific growth shocks, such as productivity shocks. We estimate the effect of real exchange rate movements on growth on a large panel of close to 150 countries over a sample of five-year periods from 1970 to 2010.The paper uncovers three main results:• Our identification strategy finds a strong and statistically significant positive (negative) effect of real depreciation (appreciation) on real per capita growth over five-year average periods. The effect is visible in developing countries and pegs, and is not significant or wrongly signed in advanced countries and floats.• The effects appear to be approximately symmetric between appreciations and depreciations, although large depreciations appear to have a stronger impact than large appreciations on average.• The effects that we estimate through the IV approach are much larger than previous comparable results in the literature.Our overall conclusion is that the real exchange rate does matter for growth in developing economies, but substantially less so in advanced ones, which confirms and strengthens the conclusions of Rodrik (2008).It should also be pointed out that our results suggest that using the exchange rate as a policy lever could be beneficial only in the early stages of economic development, while it becomes irrelevant in the long term...

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“…According to Habib et al (2017), whilst politicians are often convinced that a lower exchange rate will spur economic growth, economists on the other hand are generally skeptical that the relative price of two currencies may be a fundamental driver of economic growth over the long run. 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).…”

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 Rates, Trade, and Growth: Italy 1861-2011

Cited by 74 publications

References 85 publications

Impacts of Macro Economic Variables on the RMG Export Growth of Bangladesh

Impacts of Macro Economic Variables on the RMG Export Growth of Bangladesh

The real exchange rate and economic growth: Revisiting the case using external instruments

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

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