Back to top

Equilibrium Exchange Rates and Misalignments: The Case of Homogenous Emerging Market Economies

Error message

Deprecated function: Function create_function() is deprecated in require_once() (line 591 of /usr/www/users/econrs/includes/cache.inc).
Author(s): 
Christian K. Tipoy, Marthinus C. Breitenbach & Mulatu F. Zerihun
Publication date: 
October, 2017

We compute the exchange rate misalignment for a set of emerging economies between 1980 and 2013 using the behavioural equilibrium exchange rate definition. The real equilibrium exchange rate is constructed using a parsimonious model and estimators that are robust to cross-sectional independence and small sample size bias. We find that these countries tend to intervene to avoid real appreciation of their currencies following a rise in relative productivity, casting doubt on the Balassa-Samuelson effect. East-Asian countries have maintained their currencies at an artificially low level in order to remain competitive and boost economic growth these past years.

Nike Air VaporMax
Publication PDF: 
Series title: 
Working paper 713
Classification-JEL: