The impact of real exchange rate movements on GDP growth is a hotly debated issue bothin policy and academic circles. In this paper, we provide evidence suggesting that theassociation between exchange rate misalignment and growth for a broad panel ofcountries is very weak. Controlling for...

The impact of real exchange rate movements on GDP growth is a hotly debated issue both in policy and academic circles. In this paper we provide evidence suggesting that there is not a robust statistical association between misalignment and growth for a broad panel of countries. Controlling for...

This paper analyses predictions of a simple model of currency crises in which the peg will beabandoned when the currency overvaluation hits a certain threshold, unknown to the agents. Due tolearning about the threshold, some features usually observed in the data and identified with modelswith...

In a country with high probability of default, higher interest rates may render the currency lessattractive if sovereign default is costly. This paper develops that intuition in a simple model andestimates the effect of changes in interest rates on the exchange rate in Brazil using data from...