Exchange Rates in Emerging Economies: What Do We Know? What Do We Need to Know?

75 Pages Posted: 20 Mar 2000 Last revised: 2 Mar 2024

See all articles by Sebastian Edwards

Sebastian Edwards

University of California, Los Angeles (UCLA) - Global Economics and Management (GEM) Area; National Bureau of Economic Research (NBER)

Miguel A. Savastano

Monetary and Capital Markets Departrment

Date Written: July 1999

Abstract

Exchange rates have been at the center of economic debates in emerging economies. Issues related to the feasibility of flexible exchange rates, the relationship between exchange rate volatility and growth, and the role of exchange rate overvaluation in recent crises, among other, have been extensively discussed during the last few years. In this paper we address some of the most important exchange rate-related issues in emerging economies. In particular, we deal with: (a) the merits of alternative exchange rate regimes: (b) the extent to which purchasing power parity holds in the long run in these countries; and (c) models to assess real exchange rate overvaluation. We also discuss future areas for research on exchange rates in the emerging nations.

Suggested Citation

Edwards, Sebastian and Savastano, Miguel A., Exchange Rates in Emerging Economies: What Do We Know? What Do We Need to Know? (July 1999). NBER Working Paper No. w7228, Available at SSRN: https://ssrn.com/abstract=203113

Sebastian Edwards (Contact Author)

University of California, Los Angeles (UCLA) - Global Economics and Management (GEM) Area ( email )

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Miguel A. Savastano

Monetary and Capital Markets Departrment ( email )

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