Do real exchange rate changes matter for industrial policy in emerging markets?

Abstract

ABSTRACT The purpose of this paper is to investigate the impact of real exchange rate (RER) changes on the growth rate of the agriculture, industrial, services, and extractive sectors. To this end, a panel autoregressive distributed lag (ARDL) model, for 19 emerging economies over the period 1992–2020, was employed. Our findings reveal that first; the currencies of these economies are overvalued, furthermore, in the long run, to stimulate agriculture, industry, services, and extractive activities, these economies have to undervalue the RER, which is not currently the case.