Introduction
- •The real exchange rate (RER) is one of the crucial concepts in open economy macroeconomics. Its role and importance is undisputed
- The RER misalignment affects the economy both in the short and long run. Theoretically, real exchange rate can either be undervalued, overvalued, or be at equilibrium •
- The management of the RER is essential for economic growth and development (Rodrik , 2008). •
- The deviation of RER (undervaluation or overvaluation) from its equilibrium level (internal and external balance) for a relatively long time is the RER misalignments (Razin and Collins, 1997).
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