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The study attempts to measure RMB real effective exchange rate (REER) equilibrium and its associated degree of misalignments for China using the behavioral equilibrium exchange rate (BEER) and permanent equilibrium exchange rate approaches. We use a range of economic fundamentals and employ yearly data covering the period 1980–2020, and apply the Johansen Cointegration test and other econometric methods for the study purpose. We find evidence of the existence of RMB real effective exchange rate equilibrium, and for most of the periods, the RMB REER is closer to its equilibrium level. We also find that the RMB REER misaligned with its equilibrium producing episodes of undervaluation and overvaluation, but the magnitude of the misalignments is small and the BEER approach produces a lower degree of misalignments. This suggests that the RMB undervaluation is moderate and not as exaggerated. We identify that the economic fundamentals used in this study are important determinants of RMB real effective exchange rate equilibrium. In line with the above, the study recommends that China may continue using its RMB exchange rate as its policy tool, but the policymakers should focus on the core fundamentals that derived the equilibrium exchange rate. [ABSTRACT FROM AUTHOR]

Foreign investment can mitigate the foreign exchange constraint of developing countries. It can also influence the economy's international competitiveness through appreciating or depreciating exchange rates. The exchange rate impact of domestic investment is also not straightforward and depends on some critical factors. These issues of investment often pose a policy dilemma. Against this backdrop, this paper assesses the relative impacts of foreign direct investment (FDI), domestic investment (DI), and external debt on India's real effective exchange rate and the rupee/dollar real rate for the liberalized regime for trade, investment, and exchange rates. The autoregressive distributed lag bounds testing approach to cointegration, followed by its error correction representation, finds that real exchange rate variations are associated with FDI, debt, DI, and some control variables. FDI and debt depreciate real exchange rates, indicating that these have not exacerbated the economy's international competitiveness. However, DI causes real appreciation. These findings are consistent across estimations involving alternative specifications of control variables. Offsetting impacts of FDI and DI is an interesting finding. This can stabilize the exchange rates by undermining appreciating or depreciating exchange rate trends. [ABSTRACT FROM AUTHOR]

The international nature of health tourism, which has an increasing importance, makes its interaction with the real exchange rate a prominent research topic. On this basis, this study aims to examine the relationship between health tourism revenues and real exchange rate for Türkiye, and to determine to what extent the preferences of health tourists traveling to this country are price- or cost-centered. For this purpose, Johansen cointegration and Granger causality analyses and the dataset for the period Q1 2002 – Q4 2019 were used. Findings of cointegration analysis supported that there is a long-term relationship between real exchange rate and health tourism revenues. Accordingly, a 1% change in all, developed, and developing trading partner countries based real exchange rate causes a change of 2.4065%, 2.6108%, and 2.1383% in health tourism revenues in reverse direction, respectively. These findings indicate that health tourism revenues are highly sensitive to the changes in real exchange rates. Furthermore, Granger causality analysis supported a one-way causal relationship from all three real exchange rates to health tourism revenues. Considering the findings, it is possible to state despite the high quality of health services in Türkiye, prices or costs are significantly effective in the decisions of health tourists. [ABSTRACT FROM AUTHOR]

Purpose: The present study aimed to examine the effect of received remittance inflows on the price level ratio of the purchasing power parity conversion factor to the market exchange rate in 36 developed and developing countries from 2004 to 2020. Design/methodology/approach: The panel data conducted a comparative analysis and used panel least squares, regression with Driscoll-Kraay standard errors of fixed effect, random effect, feasible generalised least squares and maximum likelihood robust least squares to overcome the heterogeneity issue. Furthermore, the two-step difference generalised method of moments to overcome the endogeneity issue. Diagnostic tests were used to increase robustness. Findings: In the studied countries, there was a statistically significant negative relationship between received remittance inflows and the price-level ratio of the purchasing power parity conversion factor to the market exchange rate. This relationship explains why remittance flows depreciate the real exchange rate. The study's results also indicated that attracting investments can improve the quality of institutions despite high tax rates, leading to low tax revenue. Originality/value: The current study findings enrich the understanding of policies of how governments should minimise tariff rates on capital imports and introduce export-oriented incentive programmes. The study also revealed that Dutch disease can occur due to differences in the demand structure and manufacturing development policy. [ABSTRACT FROM AUTHOR]

The fiscal policy's impact on the real exchange rates is highly controversial in theory and practice but noteworthy for macroeconomic policy. This issue is more pertinent in developing countries with an active fiscal policy or wider fiscal space but is explored less. To our knowledge, the fiscal policy impact on the real exchange rate in India is not documented. Against this backdrop, this study explores this in India involving disaggregated data of government consumption and investment spending and a few related variables like trade openness, private consumption spending, and money supply for the period 1996:1–2023:1. The results corroborate long-run associations of real exchange rate and some combinations of the selected other variables. The real exchange rate dynamics estimated through the cointegrated vector autoregressive model followed by an impulse response analysis have shown that government investment spending causes a real appreciation. In contrast, government and private consumption spending exert pressure to depreciate the real exchange rate. Trade openness is another potent predictor of the real exchange rate. On the other hand, no significant impact of the money supply on the real exchange rate is noticed. The results accentuate effective fiscal allocation may be a policy tool for stabilizing the Indian rupee. The unique findings on the Indian economy may also help understand the fiscal effect of real exchange rates in other developing countries. [ABSTRACT FROM AUTHOR]

Changes in the exchange rate affect many macroeconomic variables, where the depreciation of the exchange rate leads to the effects of economic activity through the rise in the prices of foreign goods, "imports" for domestic goods, which leads to the reluctance of the decimating Local yen for foreign goods, leading to increased international competitiveness of domestic goods, high export volume and reduced imports, all resulting in improved trade deficits. Among other things, the decline in local currency exchange rates can be accompanied by deflationary effects on the gross domestic product (GDP) through a decline in the purchase of export and import prices, which occurs in developing countries such as Algeria. This analysis, which delves into a crucial aspect of international trade, examined the impact of exchange rate fluctuations on imports in Algeria from 1990 to 2021. The methodology used was the self-slope technique, also known as Vector Autoregression (VAR), which relied on two crucial variables: the real exchange rate, which measures the amount of foreign goods needed to buy one unit of domestic goods. Similar to a market research analyst, it is important to consider the impact of imports at the local level. This includes goods and services sourced from foreign countries to meet domestic market and consumers' demands, especially during ongoing local protests. The analysis has found a negative and non-significant relationship between the real exchange rate and imports at a significance level of 5%, which means that the real exchange rate does not affect Algerian imports, as most Algerian imports are basic food commodities. These intermediate and productive goods cannot be dispensed without a local alternative. Hence, it indicates that fluctuations in exchange rates have no impact on Algerian imports.

Purpose This paper explores the relationship between exchange rates, exports, and foreign direct investment in South Africa. Methodology The paper utilized Johansen cointegration, vector error correction model (VECM), and Granger causality test on annual data from 1986 to 2022. Findings The study reveals a substantial causal relationship between the Real Exchange Rate (RER) and Real gross domestic product per capita (GDPPC). The RER implies that an increase in the value of the home currency causes a decline in exports (EXP). Disregarding the economic conditions in South Africa, in essence, only demonstrates that any upward or negative movement in RER causes GDPPC to grow or fall since any rand depreciation offers a pathway to reduce domestic imports while raising local exports, which leads to greater GDPPC. Conclusion This study concludes that adopting laws that support RER, exports, and foreign direct investment is important for South Africa's economic development. These policies can also be useful during national unrest, such as pandemics and emergencies. It is also important to consider the stability of domestic funds and how they affect foreign and domestic business sectors when developing a financial strategy and carefully managing foreign direct investment.

This article investigates the causes of structural change in Brazil, through the rise and the fall of the manufacturing industry, and the consequences for total factor productivity and manufacturing labour productivity, from 1947 to 2021. Our results show that the industrialization of the Brazilian productive structure is positively associated with expansions in infrastructure investments and with the pursuit of a competitive real exchange rate, that is, with policies oriented towards economic development. Our findings also indicate that such variables exert a direct influence on total factor productivity and manufacturing labour productivity and an indirect influence through their impacts on the Brazilian productive structure. Our conclusions suggest that an important cause of the Brazilian premature deindustrialization, and then of its poor performance in terms of total factor productivity and manufacturing labour productivity, is the adoption of policies not oriented towards economic development adopted since the neoliberal reforms of the 1980s and 1990s. [ABSTRACT FROM AUTHOR]

Changes in the exchange rate affect many macroeconomic variables, where the depreciation of the exchange rate leads to the effects of economic activity through the rise in the prices of foreign goods, "imports" for domestic goods, which leads to the reluctance of the decimating Local yen for foreign goods, leading to increased international competitiveness of domestic goods, high export volume and reduced imports, all resulting in improved trade deficits. Among other things, the decline in local currency exchange rates can be accompanied by deflationary effects on the gross domestic product (GDP) through a decline in the purchase of export and import prices, which occurs in developing countries such as Algeria. This analysis, which delves into a crucial aspect of international trade, examined the impact of exchange rate fluctuations on imports in Algeria from 1990 to 2021. The methodology used was the self-slope technique, also known as Vector Autoregression (VAR), which relied on two crucial variables: the real exchange rate, which measures the amount of foreign goods needed to buy one unit of domestic goods. Similar to a market research analyst, it is important to consider the impact of imports at the local level. This includes goods and services sourced from foreign countries to meet domestic market and consumers' demands, especially during ongoing local protests. The analysis has found a negative and non-significant relationship between the real exchange rate and imports at a significance level of 5%, which means that the real exchange rate does not affect Algerian imports, as most Algerian imports are basic food commodities. These intermediate and productive goods cannot be dispensed without a local alternative. Hence, it indicates that fluctuations in exchange rates have no impact on Algerian imports. [ABSTRACT FROM AUTHOR]

This study empirically investigates the influence exerted by the real exchange rate (RER) on investments in 81 sectors of Brazil's manufacturing industry, between 2007 and 2018. The work has a number of novel features. First, a more disaggregated database is employed than that commonly found in the existing literature. Second, the article's empirical findings indicate the existence of two competing channels through which a competitive RER may influence sectoral investments, that is: (i) positively, by enhanced exports and (ii) negatively, via more expensive imported inputs. Third, our empirical results also indicate that the RER's influence is more significant in sectors with a lower mark-up, which means that a competitive RER—caused by expanding revenues from exports, offsets a lack of internal funds to finance new investments. Fourth, we tested the existence of an import penetration channel. The results reveal that a competitive RER increases investments as consumers substitute imported goods with domestic ones. [ABSTRACT FROM AUTHOR]

In the context of the increasing interdependence of countries due to the development of international trade, a relevant question arises as to whether it is necessary to conduct independent monetary policies for each country or whether it is advisable to coordinate these policies. This question becomes a key in the debate on optimal monetary policy strategies in open economies. The aim of this study is to analyze the impact of asymmetric aggregate demand shocks on the appropriateness of monetary policy coordination in a simple stochastic model of two interacting countries. The analysis of equilibrium states of the monetary authorities' interaction strategies under study was carried out analytically by minimizing the loss function and solving one-period static optimization problems. The equilibrium states of macroeconomics of interacting countries under coordination of monetary policy and in cases of lack of coordination (Nash and Stackelberg equilibrium) in the presence of asymmetric, serially uncorrelated demand shocks have been analyzed. It is proven that the response of inflation to asymmetric demand shocks is smaller in the case of coordinated policy than in the case of non-cooperative policy. The loss function analysis shows that the compensation of demand shocks is found to be more costly in Nash equilibrium than in the case of monetary authority coordination policy. The analysis of the monetary authorities' interaction strategies showed that the real exchange rate plays an important role in balancing supply and demand in the two economies. [ABSTRACT FROM AUTHOR]

This paper globally analyzes the bivariate relation between large current account imbalances and the real exchange rate over different degrees of nominal exchange rate variability. Employing both linear and nonlinear panel estimation procedures, we typically find an inverse long-run link between large imbalances and the real exchange rate at lower nominal exchange rate rigidity levels. This is in contrast to the often non-existent or positive comovement that materializes under lower nominal exchange rate variation. Our results thus suggest that greater nominal exchange rate adjustment can induce a stabilizing "current account"-"real exchange rate" relation. Meanwhile, current account adjustment speeds up with more flexible nominal exchange rates. Along the cross-section, the most salient findings are i) the striking positive relation between current account persistence and real exchange rate persistence based on country-specific estimates and ii) the inverse correlation between persistence in either the current account or real exchange rate and nominal exchange rate volatility. [ABSTRACT FROM AUTHOR]

The aims of this study is to investigate the relationship between real exchange rate and innovation in China for the period spanning from 1985 to 2020 using an annual time series data collected from different sources. The study employs autoregressive distributed lag bound test and other econometrics techniques to analyse the short‐run and long‐run relationship among the variables. The findings of the study reveal the existence of short‐run and long‐run relationship between real exchange rate (undervalued RMB) and technological innovation. Furthermore, real exchange rate (undervalued RMB) has positive effect on innovation while real exchange rate volatility is negatively affect innovation. Based on the above empirical findings, the study suggests some policy implications which are considered important for fostering rapid and sustainable economic growth. [ABSTRACT FROM AUTHOR]

We analyze the determinants of capital flight in three resource scarce MENA countries namely Egypt, Morocco, and Tunisia. Our methodology involves both the linear and nonlinear autoregressive distributed lag (ARDL) cointegration approaches, with a focus on asymmetric relationships between capital flight and the real exchange rate, to distinguish the impact of real appreciation and depreciation of domestic currency on capital flight. The results based on nonlinear ARDL approach using annual data between 1977 and 2019 indicate that in Egypt, financial openness is negatively related with capital flight, while real depreciation seems to increase it in the long run. Our findings also reveal that the real GDP growth rate, institutional quality as well as inflation are important factors affecting capital flight in Morocco, whereas financial openness and the real exchange rate influence capital flight significantly in Tunisia. [ABSTRACT FROM AUTHOR]

Previous research that assessed the asymmetric impact of currency depreciation on domestic investment considered experiences of seven industrialized countries, six emerging economies, and eighteen countries from Africa. We add to this new literature by considering the experiences of eight Asian countries. Like previous studies, our asymmetric analysis that required estimating nonlinear models revealed much more significant outcome than the linear and symmetric models. It predicted short-run asymmetric effects of exchange rate changes on domestic investment in all eight countries that lasted into long-run asymmetric effects in Hong Kong, Indonesia, South Korea, Malaysia, and Singapore. Additional analysis revealed that currency depreciation has adverse long-run effects on domestic investment in all five countries. [ABSTRACT FROM AUTHOR]

Economists have hypothesized that currency appreciation resulting from oil production in oil-rich countries can suppress the production of tradable goods, a phenomenon known as Dutch disease, often assessed using econometric models. This study leverages sanctions on Iranian oil exports, employing a quasi-experimental design with two distinct periods (1959–2020): one marked by sanctions (oil revenue recession) and the other by non-sanctions (oil revenue boom). The result shows a reversal of the Dutch disease effect during sanctions, leading to a real depreciation of the national currency and heightened production of tradable goods over non-tradable ones. The observed pattern of the real exchange rate aligns with Dutch disease dynamics, depreciating during sanctions and appreciating during non-sanction periods. Furthermore, the tradable sector exhibited increased share and real output growth compared to the non-tradable sector during the sanction period. [ABSTRACT FROM AUTHOR]

ABSTRACT Departing from the literature that established a positive relation between exchange rate undervaluation and economic growth, this paper explores the causes of persistent undervaluation (or overvaluation) of the exchange rate. We first discuss the variables that could explain persistent misalignment of the real exchange rate on a theoretical basis. Then we present empirical evidence of the relation between those variables in selected country groups. We proceed by employing econometric models to estimate the overvaluation or undervaluation based on a panel dataset comprising 119 countries from 1980 to 2022. Our findings indicate that countries with higher savings rates, government debt, and openness to trade tend to exhibit a more undervalued currency, the opposite happening to countries with better terms of trade and larger capital inflows.

This paper analyzes the role of the nature of traded goods in the effect of the real exchange rate on the trade balance in West African Economy and Monetary Union countries. Empirically, the estimation of the parameters of a distributed lag autoregressive model using the technique of dynamic common correlation estimators is carried out. The results show that, firstly, the low level of intra-industry trade comfort positive real exchange rate effect on trade balance. However, WAEMU countries export raw materials used by their foreign trading partners to manufacture products, which WAEMU countries import in turn; but the raw materials percentage used in the manufacture of those products is negligible to have a beneficial impact on trade balance. Secondly, foreign income levels are less favorable to the countries’ balance of trade, as partners have a preference for increasingly sophisticated goods that WAEMU countries do not produce. In terms of economic policy implications, a currency devaluation would have an expected positive effect if trade policy would encourage the consumption of goods and services containing, in their manufacturing process, a significant quantity of their exported products. This article contributes to the existing economic literature by taking into account the characteristics of traded goods in the analysis of the influence of the real exchange rate on the trade balance. A low content of exported goods in the manufacturing process of imported goods from a less advanced country could limit the rebalancing of its trade balance following a change in the real exchange rate.

AbstractNinety-five percent of Kenyan coffee is exported as green coffee in the international market in Europe. As a spot market, this presents a problem in that the currency of the foreign market differs from that of the domestic country (Kenya), resulting in an exchange rate problem. Kenya has a floating exchange rate system, which means that the country’s exchange rate is decided by the forces of demand and supply for domestic currency. This means that there is a comovement of domestic currencies against other global currencies; in this case, the currencies of Kenya’s key coffee market. Therefore, this study examines the influence of currency volatility on Kenyan coffee exports. According to recent figures from the Central Bank of Kenya, Kenya’s real exchange rate fluctuated from 2001 to 2020 and the country recorded a negative trend in coffee exports during the same period. This begs the question of whether real exchange rate volatility had an impact on coffee exports during this period. Data was sourced from the Coffee Directorate, the International Coffee Exchange, and the Central Bank of Kenya and was analyzed using the gravity model. The exchange rate volatility was estimated using Purée and Steinherr’s model. The findings show that exchange rate volatility hurts Kenyan coffee exports. Similar results were obtained through robustness checks by quantile regression. Consequently, this study advises that monetary and fiscal policy measures should be tailored to reduce exchange rate volatility, while still promoting agricultural exports and overall macroeconomic stability.

Copyright of Investigación Económica is the property of Universidad Nacional Autonoma de Mexico, Facultad de Economia and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

This study delves into the intricate relationship between fluctuations in the real exchange rate and the trade balance, situated within the framework of a 'two-country' trade theory model. Despite a wealth of prior research on the impact of exchange rates on international trade, the precise extent of this influence remains a contentious issue. To bridge this gap, our research adopts a pioneering approach, employing three distinct artificial intelligence-based influence measurement methods: Mean Decrease Impurity (MDI), Permutation Importance Measurement (PIM), and Shapley Additive Explanation (SHAP). These sophisticated techniques provide a nuanced and differentiated perspective, enabling specific and quantitative measurements of the real exchange rate's impact on the trade balance. The outcomes derived from the application of these innovative methods shed light on the substantial contribution of the real exchange rate to the trade balance. Notably, the real exchange rate (RER) emerges as the second most influential factor within the 'two-country' trade model. This empirical evidence, drawn from a panel dataset of 78 nations over the period 1992–2021, addresses crucial gaps in the existing literature, offering a finer-grained understanding of how real exchange rates shape international trade dynamics. Importantly, our study implies that policymakers should recognize the pivotal role of the real exchange rate as a key determinant of trade flow. [ABSTRACT FROM AUTHOR]

The Dutch disease literature reveals several gaps between empirical evidence and theoretical predictions. To bridge such gaps, I develop a model that accounts for uneven spillovers of technological progress from the resource sector to other domestic sectors. I then employ a dynamic panel approach to align the theory with the data. I find that the real exchange rate appreciation resulting from a resource boom (i.e., the spending channel) is more pronounced in resource-poor countries than in resource-rich countries. Additionally, the resource movement channel exhibits differences between resource-rich and resource-poor countries. In resource-rich countries, a resource boom reduces the growth rate in the manufacturing sector more than in the service sector, leading to a decrease in relative sectoral output and a slowdown in economic growth. On the other hand, in resource-poor countries, a resource boom accelerates the growth of the manufacturing sector and decelerates the growth of the service sector, resulting in an increase in relative sectoral output and economic growth. [ABSTRACT FROM AUTHOR]

The validity of absolute purchasing power parity (APPP) between the pairs of 55 representative countries, along with their pooled data, is examined empirically. A rule of thumb for the validity of APPP is tentatively proposed. That is, for a pair of countries exhibiting the Penn effect, when the GDP per capita of one country is less than half of the other's, it is very likely that APPP does not hold. However, when the GDP per capita of one country is greater than half of the other's, there is a certain possibility that APPP holds. [ABSTRACT FROM AUTHOR]

ABSTRACT This article investigates the causes of structural change in Brazil, through the rise and the fall of the manufacturing industry, and the consequences for total factor productivity and manufacturing labour productivity, from 1947 to 2021. Our results show that the industrialization of the Brazilian productive structure is positively associated with expansions in infrastructure investments and with the pursuit of a competitive real exchange rate, that is, with policies oriented towards economic development. Our findings also indicate that such variables exert a direct influence on total factor productivity and manufacturing labour productivity and an indirect influence through their impacts on the Brazilian productive structure. Our conclusions suggest that an important cause of the Brazilian premature deindustrialization, and then of its poor performance in terms of total factor productivity and manufacturing labour productivity, is the adoption of policies not oriented towards economic development adopted since the neoliberal reforms of the 1980s and 1990s.

ABSTRACT Commodity dependence is a long-lasting feature of South American economies, with far reaching effects in economic and social performance. This paper focuses in the interaction between commodity prices and real exchange rate and in its effects on productive capabilities. New-Developmentalist approach has labeled that situation as a “Dutch-Disease”. I propose a Balance of Payment Constraint Growth model especially designed to address some specificities of commodity dependence that allow to theoretically analyze this issue. Empirical tests are conducted for the period 1970-2017. It is found that price surges are damaging for productive capabilities only in the context of the dismantling of state intervention.

ABSTRACT New Developmentalism doctrine defends the central role played by a competitive real exchange rate in promoting catch-up in developing economies. Recently, this theory has been questioned by critics; the main criticism has been that an outward growth strategy based on a competitive real exchange rate would harm income/real wage distribution and have a negative effect on the economy. This study discusses how the real exchange rate influences growth in light of the new developmentalist doctrine and the contrasting experiences of Asian and Latin American countries. Its main contribution is to document the influence of the real exchange rate on economic performance, specifically through certain transmission channels. The article’s findings suggest that a competitive RER is an important aspect in a country’s growth path, insofar as it favors profits, capital accumulation, net exports, and gains in social capabilities.

In this paper, we test the validity of the purchasing power parity (PPP) hypothesis between Türkiye and its trading partners - the European Union, China, and the US - for the period from January 2001 to January 2020. We test the stationarity of the real exchange rates for the validity of the PPP hypothesis by applying linear and nonlinear unit root tests. We also employ Fourier-based tests to account for the structural changes that occurred in the considered period. Test results indicate that shocks are temporary, and the PPP hypothesis is valid for Türkiye. [ABSTRACT FROM AUTHOR]

In this paper we take a novel approach to examining the trade imbalances between the Southern Eurozone countries and the Northern Eurozone countries by aggregating them into a Southern Group and Northern Group. We then explore three possible causes of the trade imbalances, which are the fiscal channel, the investment channel and the competitiveness channel. We find that all three channels are important in explaining the emergence and correction of trade imbalances. In particular, we find that an increase in fiscal deficits in the North are twice as effective in reducing trade imbalances than fiscal consolidation in the South. By contrast, increased investment in the North has a similar impact to reduced investment in the South in correcting the trade imbalances. Finally, we find that a depreciation of the South's real exchange rate is associated with a long run deterioration in the Southern Group's trade balance suggesting that the South needs to seek non‐price competitiveness channels to address its trade imbalances. [ABSTRACT FROM AUTHOR]

The Dutch disease phenomenon has been related to foreign inflows into emerging economies in particular, including foreign aid, migrant’s remittances, and foreign direct investment. A surge in these inflows is expected to yield a rise in the real exchange rate. Recipient countries have seen a decline in industry as a result of the rise in the non-marketable sector and the slump in the marketable sector. This study empirically investigates the mechanisms of real exchange rate adjustments to migrant remittances, ODA, and FDI toward emerging economies. For the analysis covering the years 2001–2020, dynamic panel data approaches, difference GMM and system GMM, are used to investigate the incidence of Dutch Disease in 84 emerging economies. Numerous econometric studies have shown that Dutch Disease does exist in emerging economies. The Dutch Disease theory is supported by an expanded study that has included the empirical analysis of both industrial (marketable) and service (non- marketable) sectors. [ABSTRACT FROM AUTHOR]

• In recent years many developing countries pursued policies aimed at increasing the banking sector's ability and willingness to lend to households. • These policies contributed to relaxing borrowing constraints households were previously subjected to. • This paper presents a two-sector open economy model that examines the sectoral implications of policy driven household lending expansions. • I use macroeconomic data from the Turkish economy to motivate the model. • The paper shows that policy driven expansions in household lending can have adverse sectoral implications by benefiting low productivity nontradable industries at the expense of higher productivity tradable industries. This paper analyses the sectoral implications of household credit expansions in a two-sector open economy model. In the model, policy-induced expansion in banks' willingness and ability to lend to households results in new lending, boosting aggregate demand and average wages in the nontradable sector. Under fixed relative wages and mark-up pricing in the tradable sector, wage pressures translate into inflationary pressures. The inflation-targeting central bank increases the policy rate to contain inflationary pressures. This intervention causes a real exchange rate appreciation, followed by a reduction in international competitiveness and a contraction of the tradable sector output. This way, the model illustrates that consumer credit expansions can trigger premature deindustrialisation , shifting the sectoral structure away from the high-productivity tradable sector towards the lower-productivity nontradable sector. Key macroeconomic developments from the Turkish economy between 2002 and 2013 are presented to motivate the model. [ABSTRACT FROM AUTHOR]

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This paper considers alternative measures of a country's trading gains, i.e., the extra income that it earns (or loses) as the result of changes in the relative prices relevant for international trade, and which makes up the difference between real gross domestic product (GDP) and real gross domestic income (GDI). Looking at both the Laspeyres and the Törnqvist aggregation, we show that the trading gains really consist of two components, a terms‐of‐trade effect and a real‐exchange‐rate effect. Nearly all national statistical agencies, receiving no firm guidance from international organizations in this matter, merely consider the first effect, which suggests that the so‐called trading‐gain estimates they publish are incomplete and misnamed. Even more seriously, it implies that the corresponding measures of real GDI they derive are conceptually flawed. A straightforward way to circumvent these difficulties is to use the gross domestic final expenditure price index as deflator when computing real GDI and the trading gains. Some numerical estimates for Australia are provided as an illustration. The paper also identifies the underlying linear and Translog real GDI functions for which the Laspeyres and Törnqvist terms‐of‐trade and real‐exchange‐rate effects are exact. [ABSTRACT FROM AUTHOR]

Currency devaluation is a standout amongst the most emotional even awful proportions of financial strategy that a legislature may attempt It generally creates cries of shocks and Sustainable economic growth and development is undoubtly, one of the most challenging development issue, nowadays, in the developing countries Therefore, this study investigates theoretically and empirically the impact of currency devaluation on economic growth of Pakistan The study finds evidence of non-linearity in this relationship and capture that through a smooth transition regression model. Using annual data for the period 1975-2018, employing ARDL bounds test. From an evaluation of the overall analysis and results, it is concluded that foreign exchange reserves have positive and significant short run effect for all the countries. Inflation has negative and significant effect on economic growth of all the countries while real exchange rate has also positive and significant effect on economic growth. The government spending on development has positive and significant effect in short run scenario for all the selected countries while the money growth have positive and negative but significant effect on different countries depending on the political situation and economy based on agrarian product or industrial products. The results of this study confirm the finding of most previous study, since the advent of the exogenous growth theory. The study suggests that all the variables e.g. inflation, foreign exchange reserves, real exchange rate, money growth and government spending could be effectual in these augmenting economies. [ABSTRACT FROM AUTHOR]

The impact of real exchange rate movements on growth is a hotly debated issue in policy and academic circles. We provide evidence that this association is very weak for a broad panel of countries. Controlling for initial GDP, country and time fixed effects, a more depreciated currency is associated with higher growth only if the savings rate is not included as a control. Further, even if the latter is not added to the estimation, the correlation becomes insignificant when outliers or very small countries are left out. Importantly, this also holds for the specific subsample of emerging economies. [ABSTRACT FROM AUTHOR]

In contrast to the oil boom in the USA, Mexico's oil production has been declining continuously for the last 15 years. Lower output in the sector has affected various aspects of Mexico's economy, one of which we found to be the real exchange rate: the decrease in productivity in the oil sector compared to the non-tradable sector, which in turn has caused a depreciation of the real exchange rate. This is an inverse Balassa–Samuelson effect, and the experience of Mexico serves as a wake-up call to countries whose economies are highly dependent on non-renewable commodities. To perform our analysis, we begin by calculating productivity by sector as total factor productivity. We then estimate the determinants of the real exchange rate by including the productivity of Mexico's oil- and non-oil tradable sectors in order to disentangle their contributions. [ABSTRACT FROM AUTHOR]

Commodity booms generally induce real exchange rate appreciation in commodity-rich economies and make other tradable sectors less competitive. This "Dutch disease" phenomenon has been blamed for leading to structures of production with low diversification and undermining sustainable growth. In this paper, we explore whether capital controls can mitigate the transmission of commodity price changes to the real exchange rate and shield manufactured exports. Examining a panel of 37 commodity-abundant countries over the period 1980–2020, we find that a steeper commodity currency appreciation indeed has a more detrimental impact on manufactured exports. Restrictions on capital flows tend to reduce real appreciation pressures and the severity of the Dutch disease. Countercyclical capital controls seem to help foster economic diversification in commodity-dependent developing countries. [ABSTRACT FROM AUTHOR]

Summary: Set‐identified vector autoregressions typically document violations of uncovered interest rate parity (forward discount puzzle) and gradual appreciation–depreciation cycles of exchange rates (delayed overshooting puzzle) following contractionary monetary policy shocks. We revisit both anomalies in a framework similar to Kim et al. (2017, JPE). We complement their identifying restrictions on how monetary policy affects the economy with restrictions on (i) how monetary policy reacts to the economy and (ii) historical monetary policy innovations. In this hybrid identification, no major forward discount premia emerge. Once we additionally impose that monetary policy propagates through domestic financial conditions, exchange rates also overshoot with less delay. [ABSTRACT FROM AUTHOR]

Copyright of Journal of Social Sciences Research / Sosyal Bilimler Arastirmalari Dergisi is the property of ODU Journal of Social Sciences Research and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

The supply of Agricultural Products to the EU country has not been able to meet the consumers demand so that the fulfillment of demand, Agricultural production must be improved . This study aims to analyze the factors that influence Agricultural exports in Tanzania to the EU countries. The research method uses quantitative analysis techniques, namely Panel data regression. This research was conducted in Tanzania using secondary data from 2002-2020 obtained at the National Bureau of Statistics,World Bank and the Ministry of Agriculture and other literature related to research. Research variables include Value of Exports,exchange rates, GDP per capita, Proximity distance, and Ecolabling. The results showed that variables GDP per capita, milk exports, and milk production have a positive influence. Meanwhile, the exchange rate has negative influence for agricultural exports.

Abstract High-tech exports play a crucial role in the growth and prosperity of the national economy due to higher added value and higher profitability. However, gaining a competitive advantage and increasing high-tech exports is arduous because of the highly competitive environment in global markets. In addition, increasing the value of the national brand through the improvement of foreign customers' mental image of products made in a specific country, can play an undeniable role in the improvement of customer’s loyalty and growth of high-tech exports. In this paper, we evaluate the impact of the national brand on high-tech exports in 12 countries with the most valuable nation-brand, using panel data and a generalized method of moments (GMM), during the period 2015–2021. The results showed the positive and significant impact of the national brand in this group. It means that although improvement of the national brand stimulates the demand for high-tech products from foreign customers, countries that have had more capacity to increase the production and supply of these products have been more successful in meeting the created surplus demand. Therefore, developing countries should take action to improve the national brand, by moving towards a knowledge-based economy, and at the same time, they have to increase their capacity of production and supply of high-tech products to be able to meet the demands of these products in global markets.

The novelty of this study is to examine the asymmetric effect of the exchange rate on bilateral export and import between Bangladesh and its three trading partners in the Bangladesh-China-India-Myanmar Economic Corridor using nonlinear ARDL models from 1973 to 2022. After controlling income and structural breaks, the empirical findings confirm the asymmetric effects of exchange rates on the short-run and long-run export and import demand functions of Bangladesh. Furthermore, the impacts of the appreciation and depreciation of the Bangladeshi currency are heterogeneous for these three trading partners. For instance, the depreciation of the Bangladeshi currency increases exports to China and India while it decreases exports to Myanmar in the short run. However, the depreciation increases exports to India and Myanmar, and the appreciation also increases exports to China and India in the long-run. On the contrary, depreciation increases imports from China and Myanmar in the short-run, while it decreases imports from Myanmar in the long run. Only appreciation has significant negative effects on China and India. As a robustness measure, we exclude the COVID-19 period. However, it does not substantially change our main findings.

New Developmentalism doctrine defends the central role played by a competitive real exchange rate in promoting catch-up in developing economies. Recently, this theory has been questioned by critics; the main criticism has been that an outward growth strategy based on a competitive real exchange rate would harm income/real wage distribution and have a negative effect on the economy. This study discusses how the real exchange rate influences growth in light of the new developmentalist doctrine and the contrasting experiences of Asian and Latin American countries. Its main contribution is to document the influence of the real exchange rate on economic performance, specifically through certain transmission channels. The article's findings suggest that a competitive RER is an important aspect in a country's growth path, insofar as it favors profits, capital accumulation, net exports, and gains in social capabilities. [ABSTRACT FROM AUTHOR]

This study examines the effects of gasoline prices, fluctuations in the actual exchange rate, and food prices on the export of vegetables and fruits from Turkey. In this study, the Nonlinear Autoregressive Distributed Lag (NARDL) approach was utilized to examine the factors influencing the exports of vegetables and fruits from 2003:1 to 2019:12. The analysis was conducted with the assumption that the relationships between gasoline, actual exchange rates, and food prices are nonlinear. The objective of the study was to ascertain the asymmetric effects of gasoline, real exchange rate, and food prices on the exportation of vegetables and fruits. The findings of the NARDL model suggest that there is a significant relationship between long-term fluctuations in gasoline prices and the export of fruits and vegetables of different magnitudes. On the other hand, it has been observed that vegetable exports experience linear effects over an extended period in relation to the real exchange rate. On the other hand, it has been observed that fruit exports are susceptible to asymmetric effects. The present study suggests that fluctuations in food prices have diverse effects on vegetable exports. [ABSTRACT FROM AUTHOR]

A monthly frequency metropolitan business cycle downturn likelihood equation is estimated for Ciudad Juarez. The binary index of economic conditions is based upon monthly IMMEX export oriented manufacturing employment. A dynamic probit methodology is used for parameter estimation. Continuous explanatory variables include a 1-year minus 1-month Mexico interest rate spread, a 2015 = 100 weighted real exchange rate index, and a 10-year minus 3-month USA interest rate spread. Parameter estimation results confirm the various hypotheses examined. However, model simulation outcomes are less favorable with the results indicating that accurate forecasting of the post-2010 business cycles may require additional refinement to the index. [ABSTRACT FROM AUTHOR]

Copyright of Investigación Económica is the property of Universidad Nacional Autonoma de Mexico, Facultad de Economia and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)