The impact of real exchange rate movements on GDP growth is a hotly debated issue both
in policy and academic circles. In this paper, we provide evidence suggesting that the
association between exchange rate misalignment and growth for a broad panel of
countries is very weak. Controlling for country fixed effects, time effects and initial GDP,
a more depreciated currency is associated with higher growth if one does not exclude
outliers. However, this positive association always vanishes after controling for the
savings rate. Importantly, this applies for both a large panel of countries and for the
emerging economies subsample.