المستخلص: |
In the past few decades, the issue of managing real exchange rate (RER) has attracted considerable attention from academics and policy makers in both developed and developing countries. What impact, if any, have exchange rate regimes had on real exchange rate misalignment and then consequently on economic growth? To investigate the impact of RER misalignment on economic growth in Arab counties1, the analysis proceeds in two steps. The first measures the exchange rate misalignment using the single equation model, while the second assesses its impact on economic growth. This study uses annual panel data for Arab nations spanning from 1990 to 2022 and employs the Generalized Method of Moments (GMM) approach. Results imply that Arab countries experienced substantial exchange rate misalignments, peaking in 2008, 2004 and 2022. The impact of exchange rate misalignment on economic growth is found to be negative and significant. appropriate exchange rate policy to reduce real exchange rate misalignment is recommended.
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