Eichengreen, Barry2017-08-282017-08-282008https://hdl.handle.net/10986/28013The real exchange rate was not at the center of the first generation of neoclassical growth models, nor was it prominent among the policy prescriptions that flowed from those models. Recent analyses, in contrast, have paid it more attention. This paper analyzes the role of the real exchange rate in the growth process, the channels through which the real exchange rate influences other variables, and policies useful (and not useful) for governing the real rate. An appendix provides econometric evidence supportive of the emphases in the text.en-USCC BY 3.0 IGOABSOLUTE VALUEACCOUNTINGADVANCED COUNTRIESADVANCED ECONOMIESASSETSBALANCE SHEETBALANCE SHEET MISMATCHESBANK LENDINGBANKRUPTCYBENEFICIARIESBUDGET DEFICITSBUSINESS CYCLESCAPITA INCOMECAPITAL CONTROLSCAPITAL FLIGHTCAPITAL FLOWSCAPITAL INFLOWSCAPITAL MARKETSCENTRAL BANKCENTRAL BANKSCOMPETITIVE EXCHANGE RATECOMPETITIVE REAL EXCHANGE RATECOMPETITIVE REAL EXCHANGE RATESCOMPETITIVENESSCONSOLIDATIONCORPORATE SAVINGSCREDIT CEILINGSCROSS-COUNTRY EVIDENCECURRENCYCURRENCY APPRECIATIONCURRENCY CRISESCURRENT ACCOUNTCURRENT ACCOUNT BALANCESCURRENT ACCOUNT SURPLUSDEVALUATIONDEVELOPING COUNTRIESDEVELOPING COUNTRYDEVELOPING ECONOMIESDEVELOPMENT BANKDEVELOPMENT ECONOMICSDISTORTIONSDOMESTIC DEMANDDOMESTIC PRICEDOMESTIC PRICE LEVELDUMMY VARIABLEECONOMETRIC EVIDENCEECONOMIC ACTIVITYECONOMIC CONDITIONSECONOMIC DEVELOPMENTECONOMIC GROWTHECONOMIC POLICYECONOMIC RESEARCHEFFECTIVE EXCHANGE RATEEMERGING COUNTRIESEMERGING MARKETEMERGING MARKET COUNTRIESEMERGING MARKETSEMPIRICAL STUDIESENTRY BARRIERSEXCHANGE RATE CLASSIFICATIONEXCHANGE RATE DEPRECIATIONEXCHANGE RATE DETERMINATIONEXCHANGE RATE FLEXIBILITYEXCHANGE RATE MOVEMENTSEXCHANGE RATE POLICYEXCHANGE RATE REGIMEEXCHANGE RATE REGIMESEXCHANGE RATE STABILITYEXCHANGE RATE SYSTEMEXCHANGE RATE VARIABILITYEXCHANGE RATE VOLATILITIESEXIT STRATEGIESEXIT STRATEGYEXPENDITUREEXPORT GROWTHEXPORT INCENTIVESEXPORT MARKETEXPORT PERFORMANCEEXPORT SHARESEXPORTERSEXPOSURESEXTERNAL DEBTEXTERNAL DEFICITEXTERNAL DEMANDFEDERAL RESERVEFEDERAL RESERVE BANKFINANCIAL CRISESFINANCIAL DEVELOPMENTFINANCIAL FRAGILITYFINANCIAL MARKETFINANCIAL MARKETSFINANCIAL RISKSFINANCIAL SECTORFINANCIAL STABILITYFINANCIAL SYSTEMSFISCAL POLICIESFISCAL POLICYFLEXIBLE EXCHANGE RATESFOREIGN CAPITALFOREIGN DIRECT INVESTMENTFOREIGN EXCHANGEFOREIGN EXCHANGE MARKETFOREIGN EXCHANGE MARKETSFOREIGN EXCHANGE RESERVESFOREIGN INVESTMENTFOREIGN INVESTORSFOREIGN MARKETSFUNDAMENTAL DETERMINANTSGLOBAL IMBALANCESGLOBALIZATIONGOVERNMENT REVENUEGROWTH RATESHEDGING INSTRUMENTSHUMAN CAPITALIMPORTIMPORTSINDUSTRIAL COUNTRIESINFLATIONINSTITUTIONAL CAPACITYINSTRUMENTINSTRUMENTAL VARIABLESINTEREST RATESINTERNATIONAL BANKINTERNATIONAL CAPITALINTERNATIONAL CAPITAL MARKETSINTERNATIONAL DEVELOPMENTINTERNATIONAL ECONOMICSINVESTMENT RATEINVESTMENT SPENDINGLABOR FORCELABOR MARKETLAND REFORMLEVELS OF INVESTMENTLEVYLIFE-CYCLE MODELLIVING STANDARDSMACROECONOMIC PERFORMANCEMACROECONOMIC POLICYMACROECONOMIC STABILITYMACROECONOMIC VOLATILITYMARKET CONDITIONSMARKET DEVELOPMENTMARKET FORCESMARKET PRESSURESMISALIGNMENTMONETARY POLICYMULTIPLE EXCHANGE RATESNATIONAL INCOMENOMINAL DEPRECIATIONNOMINAL EXCHANGE RATEOPEN ECONOMYOPTIMAL ALLOCATIONOUTPUT GROWTHPLANNED ECONOMIESPOLICY OPTIONSPOLICY RESEARCHPOLITICAL ECONOMYPOLITICAL STABILITYPORTFOLIOPOVERTY REDUCTIONPRICE OF EXPORTSPRIVATE INVESTMENTPROPERTY RIGHTSPUBLIC SPENDINGPURCHASING POWERRAPID GROWTHRATE OF GROWTHREAL APPRECIATIONSREAL DEPRECIATIONREAL DEPRECIATIONSREAL EFFECTIVE EXCHANGE RATEREAL EXCHANGEREAL EXCHANGE RATEREAL EXCHANGE RATE OVERVALUATIONREAL EXCHANGE RATE UNCERTAINTYREAL EXCHANGE RATE VOLATILITYREAL EXCHANGE RATESREGULATORY REFORMRELATIVE PRICERELATIVE PRICESRESERVERESERVE ACCUMULATIONRETURNRETURNSRISK NEUTRALSAVINGS RATESAVINGS RATESSCATTER PLOTSSLOWDOWNSTANDARD DEVIATIONSUPPLY CONDITIONSSUSTAINED GROWTHTAXTAX REFORMSTRADE LIBERALIZATIONTRADE REGIMETRADE REGIMESTRANSITION ECONOMIESUPWARD PRESSUREWORLD ECONOMYWORLD PRICEWorking PaperWorld Bank10.1596/28013