Publication:
Assessing Real Exchange Rate Misalignments

Simple item page
dc.contributor.authorKubota, Megumi
dc.date.accessioned2012-03-19T18:06:59Z
dc.date.available2012-03-19T18:06:59Z
dc.date.issued2011-12-01
dc.description.abstractThere is a renewed debate on the role of exchange rate policies as an industrial policy tool in both academic and policy circles. Policy practitioners usually examine real exchange rate misalignments to monitor the behavior of this key relative price and, if possible, exploit distortions in the traded and non-traded relative price to promote growth. Anecdotal evidence shows that some countries have pursued very active exchange rate policies to promote the export sector and enhance growth by undervaluing their currencies. The main goal of this paper is to provide a systematic characterization of real exchange rate undervaluations. The long-run real exchange rate equation is estimated using: (a) Johansen time series cointegration estimates, and (b) pooled mean group estimates for non-stationary panel data. The paper constructs a dataset of real undervaluation episodes. It first evaluates whether (and if so, to what extent) economic policies can be used to either cause or sustain real undervaluations. In this context the paper empirically models the likelihood and magnitude of sustaining real exchange rate undervaluations by examining their link to policy instruments (such as exchange rate regimes and capital controls, among other policies) using probit and Tobit models. Finally, it investigates whether foreign exchange intervention can generate persistent real exchange rate deviations from equilibrium. In general, it finds that intervention can lead to greater persistence in the incidence and magnitude of real exchange rate undervaluations.en
dc.identifierhttp://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20111229162948
dc.identifier.doi10.1596/1813-9450-5925
dc.identifier.urihttps://hdl.handle.net/10986/3694
dc.languageEnglish
dc.relation.ispartofseriesPolicy Research working paper ; no. WPS 5925
dc.rightsCC BY 3.0 IGO
dc.rights.holderWorld Bank
dc.rights.urihttp://creativecommons.org/licenses/by/3.0/igo/
dc.subjectCAPITAL CONTROLS
dc.subjectEXCHANGE RATE REGIMES
dc.subjectEXCHANGE RATES
dc.subjectEXPORT SECTOR
dc.subjectFOREIGN EXCHANGE
dc.subjectINDUSTRIAL POLICY TOOL
dc.subjectKEY RELATIVE PRICE
dc.subjectPROBIT
dc.subjectTOBIT
dc.subjectUNDERVALUATION
dc.titleAssessing Real Exchange Rate Misalignmentsen
dspace.entity.typePublication
okr.crossref.titleAssessing Real Exchange Rate Misalignments
okr.date.doiregistration2025-04-10T11:04:58.190831Z
okr.doctypePublications & Research::Policy Research Working Paper
okr.docurlhttp://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20111229162948
okr.guid746441468155729675
okr.identifier.doi10.1596/1813-9450-5925
okr.identifier.externaldocumentum000158349_20111229162948
okr.identifier.internaldocumentum15586963
okr.identifier.reportWPS5925
okr.language.supporteden
okr.pdfurlhttp://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2011/12/29/000158349_20111229162948/Rendered/PDF/WPS5925.pdfen
okr.region.administrativeThe World Region
okr.region.administrativeThe World Region
okr.unitDevelopment Research Group (DECRG)
okr.volume1 of 1
relation.isSeriesOfPublication26e071dc-b0bf-409c-b982-df2970295c87
relation.isSeriesOfPublication.latestForDiscovery26e071dc-b0bf-409c-b982-df2970295c87
Files
Original bundle
Now showing 1 - 2 of 2
Thumbnail Image
Name:
WPS5925.pdf
Size:
1.11 MB
Format:
Adobe Portable Document Format
Download
No Thumbnail Available
Name:
WPS5925.txt
Size:
289.52 KB
Format:
Plain Text
Download
License bundle
Now showing 1 - 1 of 1
No Thumbnail Available
Name:
license.txt
Size:
1.71 KB
Format:
Plain Text
Description:
Download
Collections
Policy Research Working Papers