Exchange Rate Misalignment and Growth: The Case of Sub-Saharan Africa

Momodou K. Dibba and Sheriff Touray

Exchange rate misalignment for developing countries often concerns overvaluations of the domestic currencies. The general consensus has been that misalignment (undervaluation) spurs economic growth. Recently, Gonclaves and Rodriques found this not to be so compelling with the inclusion of domestic savings in their model. However, we replicate the same methodology for sub-saharan countries and found the domestic savings rate not to be relevant, leaving the argument that misalignment is good for economic growth, at least in the case of sub-Saharan Africa.

DOI : https://doi.org/10.21102/irbrp.2019.03.151.06