Real Exchange Rate Behavior and Economic Growth: Evidence from Egypt, Jordan, Morocco, and Tunisia
IMF Working Papers, March 1, 1999
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- Real Exchange Rate Behavior and Economic Growth: Evidence from Egypt, Jordan, Morocco, and Tunisia
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Bibliographic details
- Authors: Ghiath Shabsigh, Ilker Domaç
- Published: March 1, 1999
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451845952.001
Summary
- Authors: Ghiath Shabsigh, Ilker Domaç
- Date: March 1, 1999
- Paper examines the effect of the real exchange rate misalignment (RERMIS) on the collective economic growth of Egypt, Jordan, Morocco, and Tunisia.
- The paper constructs three measures of exchange rate misalignment:
- based on purchasing power parity;
- a black market exchange rate;
- a structured model.
- Main empirical finding: the investigation confirmed the adverse effect of RERMIS on growth using all measures of RERMIS, as predicted by endogenous growth models.
- Additional empirical findings: capital growth and population have the theoretical signs predicted by the Solow growth model and are statistically significant.
Measures and Methodology
- Three distinct measures of exchange rate misalignment (RERMIS) are constructed and used in the empirical analysis:
- purchasing power parity–based measure;
- black market exchange rate–based measure;
- structured model–based measure.
- RERMIS is evaluated for its effect on collective economic growth across four countries: Egypt, Jordan, Morocco, and Tunisia.
Empirical Findings and Key Statistics
- Confirmed adverse effect of RERMIS on economic growth across all three RERMIS measures.
- Capital growth and population variables:
- Exhibit the theoretical signs predicted by the Solow growth model.
- Are statistically significant in the empirical investigation.
- Publication details:
- Pages: 24
- Volume: 1999
- Issue: 040
- Series: Working Paper No. 1999/040
- DOI: https://doi.org/10.5089/9781451845952.001
- Stock No: WPIEA0401999
- ISBN: 9781451845952
- ISSN: 1018-5941
Subject Areas and Keywords
- Subject: Currency markets, Exchange rate policy, Exchange rates, Financial markets, Foreign exchange, Real exchange rates
- Keywords include: Arab Countries, black market exchange rate premium, Currency markets, economic growth, Egypt, equilibrium RER, exchange rate misalignment, Exchange Rate Policies, Growth, Moroccan dirham, Real Exchange Rate, RER appreciation, RER behavior, RER determination, RER distortion, RER equation, RER level, RER misalignment, RER variability, substitution effect, terms of trade, WP
This summary is based on the IMF Working Paper "Real Exchange Rate Behavior and Economic Growth: Evidence from Egypt, Jordan, Morocco, and Tunisia" (Working Paper No. 1999/040).