Exchange rate misalignment estimates-sources of differences

Research output: Journal Publications and ReviewsRGC 21 - Publication in refereed journalpeer-review

12 Scopus Citations
View graph of relations


Related Research Unit(s)


Original languageEnglish
Pages (from-to)91-121
Journal / PublicationInternational Journal of Finance and Economics
Issue number2
Online published11 Oct 2013
Publication statusPublished - Mar 2014


We study the differences in currency misalignment estimates obtained from datasets derived from two different International Comparison Programme (ICP) surveys. A decomposition exercise reveals that year 2005 misalignment estimates are substantially affected by the ICP price revision. Furthermore, we find that differences in misalignment estimates are systematically affected by a country's participation status in the ICP survey and its data quality-a finding that casts doubt on the economic and policy relevance of these misalignment estimates. The findings are robust to the use of alternative datasets and specifications. The patterns of changes in estimated degrees of misalignment across individual countries, as exemplified by the Brazil, Russia, India and China economies, are highly variable. © 2013 John Wiley & Sons, Ltd.

Research Area(s)

  • Data revision, Economic factors, Measurement factors, Penn effect regression, PPP-based data

Citation Format(s)