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- Title
THE AFTERMATH OF APPRECIATIONS.
- Authors
Goldfajn, Ilan; Valdés, Rodrigo O.
- Abstract
This paper empirically analyzes a broad range of real exchange rate appreciation episodes. The objective is twofold. First, the paper studies the dynamics of appreciations, using a sample that is not limited to cases that end in crisis (or devaluation). Second, the paper analyzes the mechanism by which overvaluations are corrected. In particular, for various degrees of misalignment we calculate the proportion of the reversions that occur through nominal devaluations rather than through cumulative inflation differentials. The overall conclusion is that in most cases large and medium appreciations are reversed with nominal devaluations.
- Subjects
FOREIGN exchange rates; DEVALUATION of currency; CURRENCY question; MONETARY policy; REVERSION; PRICE inflation; FOREIGN exchange; FINANCE; ECONOMICS
- Publication
Quarterly Journal of Economics, 1999, Vol 114, Issue 1, p229
- ISSN
0033-5533
- Publication type
Article
- DOI
10.1162/003355399555990