The Exchange Rate, Real Economy and Financial Markets

13 Pages Posted: 6 Oct 2014

See all articles by Blaise Gadanecz

Blaise Gadanecz

Bank for International Settlements - Monetary and Economic Department

Aaron N. Mehrotra

Bank for International Settlements (BIS)

Date Written: October 2013

Abstract

In this paper we analyse the relationship between increased exchange rate flexibility and economic growth and its volatility in emerging market economies. We also investigate the implications of exchange rate flexibility for financial market development. We do not find a robust correlation between exchange rate flexibility and long-run growth, although exchange rate flexibility has generally been beneficial in smoothing EMEs’ output volatility in the previous decade. There are also indications that increased exchange rate flexibility is associated with a reduction in vulnerabilities such as currency mismatches, though its impact on financial market development is less clear.

Full publication: Market Volatility and Foreign Exchange Intervention in EMEs: What Has Changed?

Keywords: exchange rates, economic growth, volatility, financial market development

JEL Classification: E23, F31, O16, O40

Suggested Citation

Gadanecz, Blaise and Mehrotra, Aaron N., The Exchange Rate, Real Economy and Financial Markets (October 2013). BIS Paper No. 73b, Available at SSRN: https://ssrn.com/abstract=2497130

Blaise Gadanecz (Contact Author)

Bank for International Settlements - Monetary and Economic Department ( email )

Centralbahnplatz 2
CH-4002 Basel
Switzerland
+41 61 280 8417 (Phone)
+41 61 280 8100 (Fax)

Aaron N. Mehrotra

Bank for International Settlements (BIS) ( email )

Centralbahnplatz 2
Basel, Basel-Stadt 4002
Switzerland

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
154
Abstract Views
932
rank
263,073
PlumX Metrics