Real exchange rate misalignment and economic growth: empirical evidence from Sudan

2014 ◽  
Vol 7 (3) ◽  
pp. 207 ◽  
Author(s):  
Alamedin A. Bannaga ◽  
Ahmed A.A. Badawi
Keyword(s):  
Economic Growth ◽  
Exchange Rate ◽  
Real Exchange Rate ◽  
Empirical Evidence ◽  
Exchange Rate Misalignment

scholarly journals Exchange Rate Misalignment and Economic Growth in Pakistan: The Role of Financial Development

2020 ◽  
Vol 59 (1) ◽  
pp. 81-99
Author(s):  
Zainab Jehan ◽  
Iffat Irshad
Keyword(s):  
Economic Growth ◽  
Time Series ◽  
Exchange Rate ◽  
Real Exchange Rate ◽  
Financial Development ◽  
Adverse Impact ◽  
Series Data ◽  
Development Economic ◽  
Exchange Rate Misalignment ◽  
The Impact

This study endeavours to examine empirically how real exchange rate (RER) misalignment affects economic growth in Pakistan. In this regard, we have not only estimated the direct impact but also the indirect impact of misalignment on economic growth by using the financial development channel. We have used time series data ranging from 1980 to 2016 to carry out the empirical analysis. After testing the time series properties of the selected variables, we computed long run equilibrium RER later used to calculate RER misalignment. Finally, we estimated the impact of misalignment on per capita economic growth, both direct and indirect. Our results reveal an adverse impact of RER misalignment on economic growth. However, we report that financial development helps in minimising the adverse impact of RER misalignment, though not fully eliminating it. Based on the empirical findings, the study suggests that exchange rate policies need to be managed more cautiously. Moreover, the financial sector development needs to be strengthened which may help in fully alleviating the adverse impact of RER misalignment on economic growth. JEL Classification: F31, GOO, O47 Keywords: Real Exchange Rate Misalignment, Financial Development, Economic Growth, FMOLS

scholarly journals Real Exchange Rate and Economic Growth: New Empirical Evidence

2015 ◽  
Vol 66 (4) ◽  
pp. 686-714 ◽  
Author(s):  
Fabrício J. Missio ◽  
Frederico G. Jayme ◽  
Gustavo Britto ◽  
José Luis Oreiro
Keyword(s):  
Economic Growth ◽  
Exchange Rate ◽  
Real Exchange Rate ◽  
Empirical Evidence

Exchange rate misalignment and economic growth in India

2017 ◽  
Vol 9 (4) ◽  
pp. 414-434
Author(s):  
Vaseem Akram ◽  
Badri Narayan Rath
Keyword(s):  
Economic Growth ◽  
Exchange Rate ◽  
Real Exchange Rate ◽  
Structural Break ◽  
Annual Data ◽  
Content Type ◽  
Distributed Lag ◽  
Exchange Rate Misalignment ◽  
The Exchange Rate ◽  
The Impact

Purpose The purpose of the paper is to examine the impact of exchange rate misalignment on economic growth in India using annual data from 1980 to 2014. Design/methodology/approach First, misalignment is measured, which is defined as the deviations of the actual real exchange rate (RER) from its equilibrium level. The equilibrium real exchange rate (ERER) is estimated using the auto-regressive distributed lag (ARDL) model by considering key macroeconomic fundamentals of the determinants of RER. Zivot and Andrews’ unit root with structural break is used to test the stationarity property of data. The impact of exchange rate misalignment on economic growth has been examined using ARDL and variance decomposition techniques. Findings Our results find an overvaluation of the exchange rate till 2000, and thereafter, an undervaluation of the exchange rate prevails in India. Further, the result indicates that an increase in exchange rate misalignment leads to a decrease in economic growth and vice versa. Moreover, a positive misalignment (overvaluation) hurts the economic growth and a negative misalignment (undervaluation) promotes the economic growth. Research limitations/implications From the policy perspective, the results highlight that India needs to maintain an appropriate exchange rate which can reduce the RER misalignment. It is better for the Reserve Bank of India (RBI)’s intervention to smoothen the fluctuations of the exchange rate to avoid the inefficiency in the allocation of resources. However, to minimize the RER misalignment, the intervention should be conducted only in the short run. Originality/value The study contributes to the existing literature by estimating the exchange rate misalignment for India and its impact on economic growth.

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