The Real Exchange Rate as a Target of Macroeconomic Policy

• Autores: Frenkel, Roberto; Rapetti, Martín
• Año de publicación: 2015
• Idioma: inglés
• Tipo de recurso: parte de libro
• Fuente: Rethinking Development Strategies after the Financial Crisis
• Materia: Desarrollo Económico; Economía
• Institución: Centro de Estudios de Estado y Sociedad

Fil: Frenkel, Roberto. CEDES. Centro de Estudio de Estado y Sociedad, Área de Economía; Argentina
Fil: Rapetti, Martín. CEDES. Centro de Estudio de Estado y Sociedad, Área de Economía. Consejo Nacional de Investigaciones Científicas y Técnicas (CONICET); Argentina
In recent years, several authors have argued that developing countries should aim to target a stable and competitive real exchange rate (SCRER) to foster economic growth. A growing body of empirical research gives support to this claim. Although more theoretical work is needed, some ideas from development theory can help to explain the empirical findings. For instance, if modern tradable activities display some form of increasing returns to scale, market forces alone would deliver a set of relative prices to render capital accumulation in these activities suboptimal. This chapter supports the view that developing countries could target SCRER as part of a development strategy that promotes the expansion of modern tradable activities. We review the empirical findings, discuss the channels through which a SCRER can stimulate economic growth and describe the policies needed to pursue a strategy based on a SCRER.