Exchange Rate Volatility and Productivity Growth: The Role of Financial Development

  title={Exchange Rate Volatility and Productivity Growth: The Role of Financial Development},
  author={Philippe Aghion and Philippe Bacchetta and Romain G. Ranci{\`e}re and Kenneth S. Rogoff},
  journal={NBER Working Paper Series},
The vast empirical exchange rate literature finds the effect of exchange rate volatility on real activity to be small or insignificant. In contrast, this paper offers empirical evidence that real exchange rate volatility can have a significant impact on productivity growth. However, the effect depends critically on a country's level of financial development. The results appear robust to time window, alternative measures of financial development and exchange rate volatility, and outliers. We… Expand
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