Exchange rate misalignment and total factor productivity growth in case of emerging market economies

Akram, V and Rath, Badri Narayan (2017) Exchange rate misalignment and total factor productivity growth in case of emerging market economies. International Economics and Economic Policy. pp. 1-18. ISSN 1612-480 (In Press)

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Abstract

This paper examines the impact of exchange rate misalignment on total factor productivity growth in case of 15 emerging market economies using the annual data from 1990 to 2014. First, this study through panel cointegration test found a long-run cointegrating relationship between RER misalignment and TFP growth. Second, the DOLS results indicated that RER misalignment has negatively affected the TFP growth in the majority of the countries within the EMEs and the group as a whole too. Third, we found bi-directional panel long-run and short-run Granger causality between real exchange rate misalignment and total factor productivity growth. Finally, in order to check the robustness, the dynamic panel data results showed that RER misalignment has negatively affected the TFP growth, which is consistent with our results derived from the DOLS. Further, when we decomposed the series into pre and post global financial crisis periods, this study found that real exchange rate misalignment did not affect the TFP growth in the pre-global financial crisis, but it has significantly adverse impact on TFP growth after the global financial crisis periods.

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IITH Creators:
IITH CreatorsORCiD
Rath, Badri Narayanhttp://orcid.org/0000-0001-7211-0952
Item Type: Article
Uncontrolled Keywords: Exchange rate misalignments, Total factor productivity, Emerging market economies, Panel cointegration, Panel causality, Panel GMM
Subjects: Social sciences > Business Finance
Divisions: Department of Liberal Arts
Depositing User: Team Library
Date Deposited: 21 Mar 2017 10:01
Last Modified: 11 Sep 2017 06:52
URI: http://raiith.iith.ac.in/id/eprint/3105
Publisher URL: https://doi.org/10.1007/s10368-017-0374-6
OA policy: http://www.sherpa.ac.uk/romeo/issn/1612-4804/
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