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|Title:||International financial integration and real exchange rate long-run dynamics in emerging countries: Some panel evidence|
|Keywords:||emerging economies; real exchange rate; financial integration; misalignment; secondgenerationpanel unit root and cointegration tests|
|Citation:||Economics and Finance Discussion Paper, Brunel University, 09-16.|
|Abstract:||The aim of this paper is to provide new empirical evidence on the impact of international financial integration on the long-run Real Exchange Rate (RER) in 39 developing countries belonging to three different geographical regions (Latin America, Asia and MENA). It covers the period 1979-2004, and carries out “second-generation” tests for non-stationary panels. Several factors, including international financial integration, are shown to drive the long-run RER in emerging countries. It is found that the new financial environment characterised by international financial integration leads to a depreciation of the RER in the long run. Further, RER misalignments take the form of an under-valuation in most MENA countries and an over-valuation in most Latin American and Asian countries.|
|Appears in Collections:||Economics and Finance|
Dept of Economics and Finance Research Papers
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