Exchange rates and the speed of economic recovery: The role of financial development

Kód výsledku v IS VaVaI

<a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F00216208%3A11230%2F24%3A10486267" target="_blank" >RIV/00216208:11230/24:10486267 - isvavai.cz</a>

Výsledek na webu

<a href="https://verso.is.cuni.cz/pub/verso.fpl?fname=obd_publikace_handle&handle=hNaXUAkdD5" target="_blank" >https://verso.is.cuni.cz/pub/verso.fpl?fname=obd_publikace_handle&handle=hNaXUAkdD5</a>

DOI - Digital Object Identifier

<a href="http://dx.doi.org/10.1016/j.ecosys.2023.101165" target="_blank" >10.1016/j.ecosys.2023.101165</a>

Jazyk výsledku

angličtina

Název v původním jazyce

Exchange rates and the speed of economic recovery: The role of financial development

Popis výsledku v původním jazyce

We study the influence of the exchange rate on the speed of economic recovery in a sample of 67 developed and developing economies over the years 1989-2019. First, using a cross-sectional sample of 341 economic recoveries, we study the effect of nominal depreciation and real undervaluation on the length of economic recovery. Our findings indicate that a small nominal depreciation, as well as a real undervaluation of the domestic currency, increases the speed of economic recovery. However, this effect is small in size. Second, we use an interacted panel VAR (IPVAR) model to investigate the effect of real undervaluation on the speed of economic recovery after an external shock. While we once again find evidence that an undervalued domestic currency increases the speed of economic recovery, its positive effect is limited in size. Furthermore, we also explore the role of financial development in influencing the effectiveness of an undervalued domestic currency in stimulating economic recovery. We find that a higher level of financial development limits the negative effect of an overvalued currency on the speed of economic recovery, but does not influence the effect of an undervalued currency on economic recovery.

Název v anglickém jazyce

Exchange rates and the speed of economic recovery: The role of financial development

Popis výsledku anglicky

We study the influence of the exchange rate on the speed of economic recovery in a sample of 67 developed and developing economies over the years 1989-2019. First, using a cross-sectional sample of 341 economic recoveries, we study the effect of nominal depreciation and real undervaluation on the length of economic recovery. Our findings indicate that a small nominal depreciation, as well as a real undervaluation of the domestic currency, increases the speed of economic recovery. However, this effect is small in size. Second, we use an interacted panel VAR (IPVAR) model to investigate the effect of real undervaluation on the speed of economic recovery after an external shock. While we once again find evidence that an undervalued domestic currency increases the speed of economic recovery, its positive effect is limited in size. Furthermore, we also explore the role of financial development in influencing the effectiveness of an undervalued domestic currency in stimulating economic recovery. We find that a higher level of financial development limits the negative effect of an overvalued currency on the speed of economic recovery, but does not influence the effect of an undervalued currency on economic recovery.

Druh

J_imp - Článek v periodiku v databázi Web of Science

CEP obor

—

OECD FORD obor

50201 - Economic Theory

Projekt

—

Návaznosti

S - Specificky vyzkum na vysokych skolach

Rok uplatnění

2024

Kód důvěrnosti údajů

S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů

Název periodika

Economic Systems

ISSN

0939-3625

e-ISSN

1878-5433

Svazek periodika

48

Číslo periodika v rámci svazku

1

Stát vydavatele periodika

NL - Nizozemsko

Počet stran výsledku

25

Strana od-do

101165

Kód UT WoS článku

001203713200001

EID výsledku v databázi Scopus

2-s2.0-85181104269