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Real Exchange Rate and Economic Growth: New Empirical Evidence
Author(s) -
Missio Fabrício J.,
Jayme Frederico G.,
Britto Gustavo,
Luis Oreiro José
Publication year - 2015
Publication title -
metroeconomica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.256
H-Index - 29
eISSN - 1467-999X
pISSN - 0026-1386
DOI - 10.1111/meca.12087
Subject(s) - nexus (standard) , economics , econometrics , exchange rate , quantile , control variable , sample (material) , quantile regression , index (typography) , growth rate , control (management) , empirical evidence , macroeconomics , monetary economics , statistics , mathematics , computer science , philosophy , chemistry , geometry , management , epistemology , chromatography , world wide web , embedded system
The article empirically analyses the relationship between real exchange rate (RER) and growth rate of output. We first estimate the effect of the index of RER undervaluation on the rate of output growth in two samples of countries from 1978 to 2007. Our contribution is the use of a different dataset that increases the number of countries in the sample, as well as the number of available control variables. In doing so, the article adds to the literature by applying a method that allows for the control of income levels (quantile regressions). So, we present new findings on a non‐linear relationship the RER‐growth nexus. We conclude that maintaining a competitive level of RER has positive effects on growth rate.