Exchange rate misalignment and economic growth: recent evidence in Malaysia

The present study aims at investigating the growth effects of real exchange rate misalignments in Malaysia over the period 1991:1-2009:4. The RER misalignment is built through the estimation of the NATREX equilibrium model. Using the Autoregressive Distributed Lag (ARDL) bounds testing approach to c...

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Bibliographic Details
Main Authors: Niaz Ahmad, Mohd Naseem, M. S., Hamizah
Format: Article
Language:English
Published: Universiti Putra Malaysia Press 2013
Online Access:http://psasir.upm.edu.my/id/eprint/30858/1/Exchange%20Rate%20Misalignment%20and%20Economic%20Growth.pdf
http://psasir.upm.edu.my/id/eprint/30858/
http://www.pertanika.upm.edu.my/Pertanika%20PAPERS/JSSH%20Vol.%2021%20%28S%29%20Sep.%202013/04%20Page%2047-66.pdf
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Summary:The present study aims at investigating the growth effects of real exchange rate misalignments in Malaysia over the period 1991:1-2009:4. The RER misalignment is built through the estimation of the NATREX equilibrium model. Using the Autoregressive Distributed Lag (ARDL) bounds testing approach to cointegration framework, the results indicate the presence of positive and significant relationship between the RER misalignment and economic growth. This finding obtained is consistent with the notion that the RER misalignment through the distortion in relative price has systematic influence on the pattern of economic development.