THE REAL EXCHANGE RATE AND DEVELOPMENT THEORY, EVIDENCE, ISSUES AND CHALLENGES

This paper surveys the theoretical and empirical literature on effects of real exchange rate (RER) international trade, economic development growth. We summarize main conceptual issues, briefly discuss relevance RER as an instrument policy, provide overview macroeconomic microeconomic mechanisms that link to trade long-run growth development, analyse challenges – especially disconnect between theory data often arise in applications, new avenues for future research. In process, we present some updated estimates illustrative figures. The through which influences structural change remains a promising area research individual channels different contexts deserves much more careful investigation. Greater availability should help fill these gaps our understanding.