A Group-Specific Heterogeneous Panel Approach to the Impact of Exchange-rate Regime on Economic Growth

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Creator: 

Brault, Joshua

Date: 

2016

Abstract: 

This paper proposes a group-specific heterogeneous approach known as grouped fixed-effects to examine the impact of exchange-rate regime on economic growth. The research uses a panel consisting of 151 countries from 1999-2013. Grouped heterogeneity offers a parsimonious approach to capturing unobserved heterogeneity. Countries of similar economic institutions, economic activity, population density, and so forth, tend to adjust their long-run paths for the level of income per capita at the same speed - implying errors tend to be spatially correlated. The methodology is able to capture speed of adjustment effects to new long-run equilibriums in a parsimonious manner, which is essential to understanding factors involved in macroeconomic performance. Taking grouped patterns of heterogeneity into account, flexible and intermediate exchange-rate regimes are growth promoting relative to fixed-exchange rate regimes. These results are robust to a variety of sensitivity tests.

Subject: 

Economics

Language: 

English

Publisher: 

Carleton University

Thesis Degree Name: 

Master of Arts: 
M.A.

Thesis Degree Level: 

Master's

Thesis Degree Discipline: 

Economics

Parent Collection: 

Theses and Dissertations

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