Output, devaluation and the real exchange rate in developing countries

1991 ◽  
Vol 127 (1) ◽  
pp. 18-41 ◽  
Author(s):  
Pierre-Richard Agénor
Keyword(s):  
Developing Countries ◽  
Exchange Rate ◽  
Real Exchange Rate ◽  
The Real

scholarly journals Adjustment, Investment and the Real Exchange Rate in Developing Countries

1990 ◽  
Vol 5 (11) ◽  
pp. 491 ◽  
Author(s):  
Riccardo Faini ◽  
Jaime de Melo ◽  
Richard Baldwin ◽  
Charles Bean
Keyword(s):  
Developing Countries ◽  
Exchange Rate ◽  
Real Exchange Rate ◽  
The Real

scholarly journals Do emigrants’ remittances cause Dutch disease? A developing countries case study

2019 ◽  
Vol 30 (1) ◽  
pp. 59-76
Author(s):  
Burçak Polat ◽  
Antonio Rodríguez Andrés
Keyword(s):  
Developing Countries ◽  
Exchange Rate ◽  
Exchange Rates ◽  
Real Exchange Rate ◽  
Real Exchange Rates ◽  
Development Aid ◽  
Dutch Disease ◽  
The Real ◽  
Trade Competitiveness ◽  
Remittance Flows

Although the positive socio-economic effects of remittances for recipient countries in the short term are unmistakable, inflows of remittances may at the same time exert adverse effects on the trade competitiveness of an economy, by appreciating the real exchange rate. This phenomenon is characterised as an instance of the ‘Dutch disease’ – the negative impact of windfall revenue inflows on the competitiveness of other tradable sectors and hence on overall economic growth. While the real effect of workers’ remittances on real exchange rates in a recipient economy is still a controversial issue, several studies have analysed evidence for the existence of the ‘Dutch disease’ phenomenon in various sets of countries. The main objective of this study is to examine whether remittance flows have had any adverse effect on the international trade competitiveness of a selected group of developing countries during the period from 1995 to 2014. Using a one-step system Generalised Method of Moments specification within a simultaneous equation approach, it shows that remittance flows depreciate the real exchange rate at their levels and that the lagged value of remittances create the Dutch disease for this country group. In addition, we confirm that while trade openness and world real interest rates contribute to a depreciation in real exchange rates, gross domestic product per capita and net Official Development Aid inflows tend to appreciate real exchange rates. A policy implication is that trade liberalisation policies that lower tariff rates on capital imports and new export-oriented incentive programmes should be accompanied by measures designed to prevent appreciation in the real exchange rate: steps in this direction such as recent macroeconomic and prudential capital flow management initiatives are briefly referenced. JEL Codes: F20, F21, F22, F23

Real exchange rate targeting

2016 ◽  
pp. 44-65 ◽  
Author(s):  
S. Moiseev ◽  
I. Pantina
Keyword(s):  
Developing Countries ◽  
Exchange Rate ◽  
Real Exchange Rate ◽  
Economic Literature ◽  
Theoretical Frameworks ◽  
The Real ◽  
Inflation Bias ◽  
Exchange Rate Targeting ◽  
High Degree

Developing countries typically exhibit a high degree of macroeconomic variablesinstability. This feature is particularly evident as regards the volatility of the real exchange rate. The concern with these destabilizing effects generatedby real exchange rate instability has prompted some developing countries to adopt real exchange rate targeting since the late 60’s. However, this policy produces an inflation bias. This paper reviews economic literature on theoretical frameworks and empirical evidences about effects of real exchange rate targeting.

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