Working Paper: NBER ID: w7228
Authors: Sebastian Edwards; Miguel A. Savastano
Abstract: Exchange rates have been at the center of economic debates in emerging economies. Issues related to the feasibility of flexible exchange rates, the relationship between exchange rate volatility and growth, and the role of exchange rate overvaluation in recent crises, among other, have been extensively discussed during the last few years. In this paper we address some of the most important exchange rate-related issues in emerging economies. In particular, we deal with: (a) the merits of alternative exchange rate regimes: (b) the extent to which purchasing power parity holds in the long run in these countries; and (c) models to assess real exchange rate overvaluation. We also discuss future areas for research on exchange rates in the emerging nations.
Keywords: No keywords provided
JEL Codes: F31; F33; F41
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Nominal exchange rate regimes (F33) | economic performance (P17) |
| fixed exchange rates (F31) | economic stability (E63) |
| fixed exchange rates (F31) | crises (H12) |
| Purchasing power parity (F31) | real exchange rate misalignment (F31) |
| productivity growth (O49) | real exchange rates (F31) |
| economic growth (O49) | exchange rate behavior (F31) |
| current account sustainability (F32) | real exchange rate misalignment (F31) |