English, Article, Journal or magazine article edition: Fear of appreciation Levy-Yeyati, Eduardo; Sturzenegger, Federico

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Physical Description
  • preprint
Language
  • English

Edition details

Title
  • Fear of appreciation
Author
  • Levy-Yeyati, Eduardo
  • Sturzenegger, Federico
Physical Description
  • preprint
Notes
  • In recent years the term "fear of floating" has been used to describe exchange rate regimes that, while officially flexible, in practice intervene heavily to avoid sudden or large depreciations. However, the data reveals that in most cases (and increasingly so in the 2000s) intervention has been aimed at limiting appreciations rather than depreciations, often motivated by the neo-mercantilist view of a depreciated real exchange rate as protection for domestic industries. As a first step to address the broader question of whether this view delivers on its promise, we examine whether this “fear of appreciation” has a positive impact on growth performance in developing economies. We show that depreciated exchange rates appear to induce higher growth, but that the effect, rather than through import substitution or export booms as argued by the mercantilist view, works largely through the deepening of domestic savings and capital accumulation.
  • RePEc:ecl:harjfk:rwp07-047
  • In recent years the term"fear of floating"has been used to describe exchange rate regimes that, while officially flexible, in practice intervene heavily to avoid sudden or large depreciations. However, the data reveals that in most cases (and increasingly so in the 2000s) intervention has been aimed at limiting appreciations rather than depreciations, often motivated by the neo-mercantilist view of a depreciated real exchange rate as protection for domestic industries. As a first step to address the broader question of whether this view delivers on its promise, the authors examine whether this"fear of appreciation"has a positive impact on growth performance in developing economies. The authors show that depreciated exchange rates appear to induce higher growth, but that the effect, rather than through import substitution or export booms as argued by the mercantilist view, works largely through thedeepening of domestic savings and capital accumulation.
  • Currencies and Exchange Rates,Emerging Markets,Debt Markets,Economic Theory&​Research,Macroeconomic Management
  • RePEc:wbk:wbrwps:4387
Language
  • English
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