Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/30685 
Year of Publication: 
2009
Series/Report no.: 
CESifo Working Paper No. 2819
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
The aim of this paper is to provide new empirical evidence on the impact of international financial integration on the long-run Real Exchange Rate (RER) in 39 developing countries belonging to three different geographical regions (Latin America, Asia and MENA). It covers the period 1979-2004, and carries out second-generation” tests for non-stationary panels. Several factors, including international financial integration, are shown to drive the long-run RER in emerging countries. It is found that the new financial environment characterised by international financial integration leads to a depreciation of the RER in the long run. Further, RER misalignments take the form of an under-valuation in most MENA countries and an over-valuation in most Latin American and Asian countries.
Subjects: 
emerging economies
real exchange rate
financial integration
misalignment
second-generation panel unit-root and cointegration tests
JEL: 
E31
F00
F31
C15
Document Type: 
Working Paper
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