A1 - Virginie Coudert
A1 - C├ęcile Couharde
TI - Currency Misalignments and Exchange Rate Regimes in Emerging and Developing Countries
IS - 2008-07
T3 - Working Papers
KW - Exchange rate regimes
KW - emerging and developing countries
KW - misalignments
N2 - Pegged exchange rates are often pointed out as more prone to risk of overvaluation, because their real exchange rates have a tendency to appreciate. We check this assumption empirically over a large sample of emerging and developing countries, by using two databases for de facto classifications by Levy-Yeyati and Sturzenegger (2003) and by Reinhart and Rogoff (2004). We assess currency misalignments by estimating real equilibrium exchange rates taking into account a Balassa effect and the impact of net foreign assets. Pegged currencies are shown to be more overvalued than floating ones.
ER -