It is often argued that the parallel market premium is a useful indicator of real exchange rate misalignment in developing countries. The empirical evidence, however, does not suggest a robust correlation between these two endogenous variables that is independent of the nature of economic shocks...

The Washington Consensus emphasizes the economic costs of real exchange rate distortions. However, a sizable recent empirical literature finds that undervalued real exchange rates help countries to achieve faster economic growth. This paper shows that recent findings are driven by inappropriate...

This paper examines mean reversion in real effective exchange rates in six leading Latin American economies during the XXth century using a new data set. A unit-root approach is complemented by an error-correction model including key fundamentals such as terms of trade, trade openness and...

The U.S. dollar's nominal effective exchange rate closely tracks global financial conditions, which themselves show a cyclical pattern. Over that cycle, world asset prices, leverage, and capital flows move in concert with global growth, especially influencing the fortunes of emerging and...

The relationship between real interest rates, saving, and growth is a central issue in development economics. Using macroeconomic data for a cross-section of countries, we estimate a model in which the intertemporal elasticity of substitution varies with the level of wealth. The estimated...

This paper is the final report of a research project whose aim was to analyse the methodology of calculating the costs and benefits for the Czech Republic, Hungary, Poland and Slovenia of the envisaged accession to the European Union. The research focused particularly on the impact of the...

This paper investigates the changes in expenditure policy in oil-exporting countries during boom–bust in commodity price cycles, and their implications for real exchange rate movements. To do so, we introduce a Dutch disease model with downward rigidities in government spending to revenue...

This paper examines the impact of improvements in productivity on prices, output, the real wage rate and the balance of payments. Within the context of the model used in this paper, an improvement in productivity can take two alternative forms: (1) a cost saving for a given output and (2) an...

This paper provides compelling evidence that equity market liberalization, as the most efficient way to smooth financial market frictions such as credit constraints, can alleviate persistent cross-dynastic income inequality by promoting increased human capital accumulation. The authors examine...

An openness-led growth hypothesis investigates the causal relationship between trade openness1 and economic growth. Indeed, trade openness can stimulate economic growth by enhancing the international flow of knowledge and innovation and by allowing economies of specialization, not only in the...