- The Real Exchange Rate and Economic Growth: Theory and Evidence
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- by Rodrik, Dani
- I provide evidence that undervaluation (a high real exchange rate) stimulates economic growth. This is true particularly for developing countries,
suggesting that tradable goods suffer disproportionately from the distortions
that keep poor countries from converging. I present two categories of explanations as to why this may be so, focusing on (a) institutional/contractual
weaknesses, and (b) market failures. A formal model elucidates the linkages
between the level of the real exchange rate and the rate of economic growth.
- Publication Type: WCFIA Working Paper
- Published Date: August 2007
- Field of Interest: International Economics
- Rodrik, Dani. "The Real Exchange Rate and Economic Growth: Theory and Evidence." Working Paper 2008-0141, Weatherhead Center for International Affairs, Harvard University, August 2007.