Financial Development, Exchange Rate Regimes, and Growth Dynamics
This paper utilizes data for African countries to analyze the extent to which financial development affects the dynamics of the relationship between exchange rate flexibility and economic growth. The findings indicate that financial development exe...
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| Language: | English |
| Published: |
World Bank, Washington, DC
2018
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/675111534786895810/Financial-development-exchange-rate-regimes-and-growth-dynamics http://hdl.handle.net/10986/30289 |
| Summary: | This paper utilizes data for African
countries to analyze the extent to which financial
development affects the dynamics of the relationship between
exchange rate flexibility and economic growth. The findings
indicate that financial development exerts a positive
influence on the relationship between exchange rate
flexibility and GDP growth as well as total factor
productivity growth. The paper also documents a positive
impact of trade openness on the relationship between
exchange rate flexibility and growth. Moreover, the results
show a strong and positive association between exchange rate
flexibility and financial development. The findings,
therefore, suggest that discussions and decisions on
exchange rate policy should be undertaken with consideration
for structural policies that address the development of the
financial sector. In addition, the paper asserts that policy
makers should adopt a stance that facilitates some
flexibility in exchange rates to foster development of the
financial infrastructure in these economies. |
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