Exchange Rates in Emerging Economies: What Do We Know? What Do We Need to Know?
Sebastian Edwards, Miguel A. Savastano
NBER Working Paper No. 7228
Exchange rates have been at the center of economic debates in emerging economies. Issues related to the feasibility of flexible exchange rates, the relationship between exchange rate volatility and growth, and the role of exchange rate overvaluation in recent crises, among other, have been extensively discussed during the last few years. In this paper we address some of the most important exchange rate-related issues in emerging economies. In particular, we deal with: (a) the merits of alternative exchange rate regimes: (b) the extent to which purchasing power parity holds in the long run in these countries; and (c) models to assess real exchange rate overvaluation. We also discuss future areas for research on exchange rates in the emerging nations.
Published: "Floating Exchange Rates in Less-Developed Countries: A Monetary Analysis of the Peruvian Experience, 1950-54", Journal of Money, Credit and Banking, Vol. 15, no. 1 (1983): 73-81.