Exchange Rate Misalignment and Its Relationship to Output Growth in South Africa
This paper establishes a simple theory-based real exchange rate (RER) Misalignment Index for countries around the world from 1950-2014, and shows that South Africa’s RER has been undervalued over the last decade. For the most recent year of 2014, d...
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| Language: | English |
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World Bank, Washington, DC
2018
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| Online Access: | http://documents.worldbank.org/curated/en/623571529321453645/Exchange-rate-misalignment-and-its-relationship-to-output-growth-in-South-Africa-background-note-for-the-South-Africa-systematic-country-diagnostic http://hdl.handle.net/10986/30009 |
| Summary: | This paper establishes a simple
theory-based real exchange rate (RER) Misalignment Index for
countries around the world from 1950-2014, and shows that
South Africa’s RER has been undervalued over the last
decade. For the most recent year of 2014, depending on the
proxy for productivity, it is undervalued from about 15
percent to 18 percent. The analysis suggests that terms of
trade fluctuations explain a large part of the
undervaluation. This study is a background note for the
South Africa Systematic Country Diagnostic. |
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