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Title:The macroeconomic effects of large exchange rate appreciations PDF Logo
Authors:Kappler, Marcus
Reisen, Helmut
Schularick, Moritz
Turkisch, Edouard
Issue Date:2011
Series/Report no.:ZEW Discussion Papers 11-016
Abstract:In this paper we study the macroeconomic effects of large exchange rate appreciations. Using a sample of 128 countries from 1960-2008, we identify large nominal and real appreciations shocks and study their macroeconomic effects in a dummy-augmented panel autoregressive model. Our results show that an exchange rate appreciation can have strong effects on current account balances. Within three years after the appreciation event, the current account balance on average deteriorates by three percentage points of GDP. This effect occurs through a reduction of savings without a meaningful reduction in investment. Real export growth slows down substantially, while imports remain by and large unaffected. The output costs of appreciation are small and not statistically significant, indicating a shift towards domestic sources of growth. All these effects appear somewhat more pronounced in developing countries.
Subjects:Current account adjustment
global imbalances
exchange rate changes
JEL:F4
F31
F32
N10
O16
Persistent Identifier of the first edition:urn:nbn:de:bsz:180-madoc-31440
Document Type:Working Paper
Appears in Collections:Publikationen von Forscherinnen und Forschern des ZEW
ZEW Discussion Papers

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