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Title:A panel data investigation of real exchange rate misalignment and growth PDF Logo
Authors:MacDonald, Ronald
Vieira, Flávio
Issue Date:2010
Series/Report no.:CESifo working paper Fiscal Policy, Macroeconomics and Growth 3061
Abstract:The paper investigates the role of real exchange rate misalignment on long-run growth for a set of ninety countries using time series data from 1980 to 2004. We first estimate a panel data model (using fixed and random effects) for the real exchange rate, with different model specifications, in order to produce estimates of the equilibrium real exchange rate and this is then used to construct measures of real exchange rate misalignment. We also provide an alternative set of estimates of real exchange rate misalignment using panel cointegration methods. The variables used in our real exchange rate models are: real per capita GDP; net foreign assets; terms of trade and government consumption. The results for the two-step System GMM panel growth models indicate that the coefficients for real exchange rate misalignment are positive for different model specification and samples, which means that a more depreciated (appreciated) real exchange rate helps (harms) long-run growth. The estimated coefficients are higher for developing and emerging countries.
Subjects:long-run economic growth
real exchange rate misalignment
panel data analysis and System GMM
JEL:F31
O47
C33
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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