On the Determinants of Exchange Rate Misalignments

The literature on exchange rate misalignments is very extensive as well as the literature on exchange rate determinants. To our knowledge, however, no study has analyzed the determinants of exchange rate misalignments. As huge capital inflows have been pouring into emerging countries since the climax of the crisis, exchange rate misalignments are becoming a crucial issue for policy makers. For a large panel of emerging and industrialized countries and on the period 1982-2008, we identify, empirically, the main determinants of exchange rate misalignments obtained thanks to a FEER approach (Williamson, 1994). Our analysis put forward trade openness, financial openness and regional specialization as determinant variables of exchange rate misalignments.

Keywords: Exchange Rate Misalignments, Trade Openness, Financial Openness, Regional Specialization

JEL Classification: F31, F32, O11

Suggested Citation: Suggested Citation

Saadaoui, Jamel and Mazier, Jacques and Aflouk, Nabil, On the Determinants of Exchange Rate Misalignments (August 27, 2014). Applied Economics Letters 20(18), pp. 1608-1610, 2013. DOI: 10.1080/13504851.2013.829189, Applied Economics Letters, volume 20, issue 18, 2013[10.1080/13504851.2013.829189], Available at SSRN: https://ssrn.com/abstract=3405807 or http://dx.doi.org/10.1080/13504851.2013.829189