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N° 2008-07 |
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| April 2008 |
| Currency Misalignments and Exchange Rate
Regimes in Emerging and
Developing Countries |
Virginie Coudert
Cécile Couharde |
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| 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. |
Non-technical summary |
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Résumé
non-technique
en français |
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| Full text |
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| Exchange rate regimes; emerging and developing countries;
misalignments |
Keywords |
| F31; F33 |
JEL classification |
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