Exchange rate misalignment and economic growth: On the possible transmission channels for emerging economies

Figures & data

Table 1. Undervaluation and growth

	Dependent variable: Growth
Variables	SGMM-1	SGMM-2	SGMM-3
Initial	0.182	−0.898***	−0.854**
Misal	0.450***	0.213*	0.266**
Misal^2	−0.0821***	−0.0458*	−0.0448**
Human capital		0.835
Investment		0.142***	0.154***
Gvt cons		0.0157
Population		0.00388***	0.00362***
AR(2) test	−1.057	−1.057	−1.055
Hansen test	4.653e-8	4.552e-8	4.678e-8

Note: *, **, *** indicate significance at 10%, 5% and 1% using robust S.E. All regressions include time and country fixed effects.

Table 2. Effect of undervaluation on tradables and growth

	Dependent variable
	Full sample			1990
Variables	Industry VA		Growth	Industry VA	Growth
Rgdp	8.638**	6.930***		3.675
Initial			−0.429*		−0.219**
Misal	−0.530			0.641*
Ind. share			0.049*		0.032*
Underval		0.608*
Overval		−1.857***

Note: *, **, *** indicate significance at 10%, 5% and 1% using robust S.E. All regressions include time and country fixed effects.

Table 3. Tradable size and institutions quality

	Dependent variable: TN
Variables	FE-1	FE-2	FE-3	FE-4
Rgdp	0.944*	0.966*	0.214	0.959*
Rgdp^2	−0.014	−0.014		−0.014
Tot	0.205*		0.199	0.197
Open		−1.24e − 07**		−6.46e − 08*
IQ	−0.001	−0.0004	−0.0005	−0.0005

Note: *and ** indicate significance at 10% and 5% using robust S.E. All regressions include time and country fixed effects.

Table 4. Effect of undervaluation on TFP

	Dependent variable: TFP
Variables	SGMM-1	SGMM-2	SGMM-3	SGMM-4
Initial TFP	−3.852***	−3.751***	−3.995***	0.00
Misal	0.569***	0.617***	0.605***	0.622***
Investment		0.019		0.019***
Human capital		−0.713		−1.296***
Institutions quality			−0.024	−0.040***
Openness			0.00008***	−0.0007***
AR(2)	0.49	0.49	0.49	0.50
Hansen test	12.67	11.96	11.96	152.07

Note: ***indicate significance at 1% using robust S.E. All regressions include time and country fixed effects.

Table 5. Effect of TFP on growth

	Dependent variable: Growth
Variables	SGMM-1	SGMM-2	SGMM-3
Initial GDP	−0.822**	0.195	−0.106
TFP hat	0.595**	0.928**	0.762**
Savings	0.0776*
Investment	0.132**	0.194***	0.200***
Terms of trade	4.995*
Human capital		−1.193	−0.831
Openness		−2.85e-06**	−2.00e-06
Gvt consumption			0.0833*
AR(2) test	0.917	0.944	0.916
Hansen test	3.400	1.84e-06	1.29e-06

Note: *, **, *** indicate significance at 10%, 5% and 1% using robust S.E. All regressions include time and country fixed effects.

Table 6. Undervaluation and growth

Variables	Growth	Growth	Growth	Growth	Growth
Initial	−6.118**	−7.815	−5.349**	−10.460**	−11.202**
Underval	0.141*	0.177***	0.162**	0.137**	0.141*
Government cons.		0.0255
Savings		−0.198		0.488***	0.504***
Human capital		8.437
Investment		1.267***	1.040***
Inflation			−0.0103***
Life expect.				0.667*	0.777*
Openness					0.12e-04**
AR(2)	0.993	1.149	1.070	1.059	1.06
Hansen	11.95	1.768	8.839	4.361	6.21

Note: *, **, ***, indicate significance at 10%, 5% and 1% using robust S.E.

Table 7. Effect of undervaluation on tradables and growth

Variables	Industry VA	Growth	Industry VA	Growth
lnRgdp	7.199**		5.280**
Underval	0.525		5.747**
Initial		−1.005***		−0.733**
Industry share		0.139***		0.0854**
Constant	−26.32	3.695***	−7.063	2.907*

Note:*, **, *** indicate significance at 10%, 5% and 1% using robust S.E.

Table 8. Tradable size and institutional quality

Variables	Full sample	Full sample	Full sample	1990	1990	1990
lnrgdpch		0.152	0.179		−0.0120	−0.0120
Tot		0.298*			−0.0210
Open		6.30e-08	3.51e-08		2.87e-05**	2.85e-05***
IQ	0.00182	0.00115	0.00231	0.00720	0.00625	0.00623
lnrgdpchsq	0.00116			−0.00115
Constant	−1.911*	−1.576	−1.787	−1.030	−0.324	−0.324

Note: *, **, *** indicate significance at 10%, 5% and 1% using robust S.E.

Table 9. Effect of undervaluation on TFP

Variables	TFPG	TFPG	TFPG
Initial TFP	−0.127***	−0.149**	−0.172***
Underval	0.119*	0.173**	0.154*
Invest.		0.00107
Human cap.		−0.0450***
IQ		0.000668	−0.000913
Constant	0.676***	0.769**	0.809***
AR(2) Test	0.426	−0.0123	0.709
Hansen Test	4.250	13.10	15.63

Note: *, **, *** indicate significance at 10%, 5% and 1% using robust S.E.

Table 10. Effect of TFP on growth

Variables	Growth	Growth	Growth
Initial	−0.0634*	−0.0585*	−0.0514
TFP hat	0.653**	0.761**	0.844**
Inflation	−0.000107***	−7.71e-05*	−9.40e-05***
Investment	0.0100***	0.00737*	0.0152***
Savings			−0.00527
Life expect.			0.00322
Open		0.00126
AR(2) test	1.077	1.088	1.077
Hansen test	1.016	0.0103	0.01

Note: ^*,**,*** indicate significance at 10%, 5% and 1% using robust S.E.

Figure 1. Misalignment index and industry value added for selected countries.

Figure 2. Distribution of undervaluation.