Arnoldshain Seminar XV
“The EU and Latin America Facing Globalization”
September 4 – 6, 2017

Biagetti, Marco, Agency for Territorial Cohesion, and Alberto Bagnai, Real Exchange Rate Misalignments and Productivity Growth
This paper sheds light on the relationship between exchange rate misalignment and productivity trend in two group of countries: euro area members, and Latin American countries, taken as two relatively homogenous groups of developed and emerging countries, respectively. We first estimate real exchange rate misalignment in the two panels by estimating the behavioral equilibrium exchange rate through panel cointegration techniques. We then estimate the impact of misalignment on productivity growth in both group of countries in a panel-ARDL setting, taking into account the role of human capital accumulation and quality of institutions. Finally, we investigate the direction of causality by means of panel causality tests. Contrary to previous studies, our findings show that real exchange misalignment significantly affects trend productivity also in developed countries.