On the Importance of Non-Tradable Goods Prices in Explaining Real Exchange Rate Movements - Reconciling the Findings of Engel (1999) and Burstein Et Al (2006)

2007 ◽  
Author(s):  
Ahmed Mohamed Rostom
Keyword(s):  
Exchange Rate ◽  
Real Exchange Rate ◽  
Tradable Goods ◽  
Exchange Rate Movements

Dominant real exchange rate movements

1989 ◽  
Vol 8 (4) ◽  
pp. 517-531 ◽  
Author(s):  
Kees Koedijk ◽  
Peter Schotman
Keyword(s):  
Exchange Rate ◽  
Real Exchange Rate ◽  
Exchange Rate Movements

Exchange Rate and Economic Growth

2017 ◽  
Vol 12 (1) ◽  
pp. 42-64 ◽  
Author(s):  
Mohammad A. Razzaque ◽  
Sayema Haque Bidisha ◽  
Bazlul Haque Khondker
Keyword(s):  
Economic Growth ◽  
Exchange Rate ◽  
Real Exchange Rate ◽  
Development Strategy ◽  
Analytical Framework ◽  
Policy Option ◽  
Exchange Rate Policy ◽  
Long Run ◽  
Exchange Rate Movements ◽  
Short Run

This article aims to understand the effects of exchange rate movements on economic growth in Bangladesh. Using a suitable analytical framework to derive an empirical specification, we construct a real exchange rate series and employ cointegration techniques to determine the output response to Bangladeshi currency depreciations. Our results suggest that in the long run, a 10 per cent depreciation of the real exchange rate is associated with, on average, a 3.2 per cent rise in aggregate output. However, a contractionary effect is observed in the short run so that the same magnitude of real depreciation would result in about a half per cent decline in GDP. While the long-run expansionary effect of real depreciations may be appealing for considering exchange rate policy as a development strategy, the likelihood of rising inflationary pressures needs to be kept in mind while pursuing this policy option.

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