01894cas a2200253 a 4500 AALejournalIMF003242 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451960358 1018-5941 BD-DhAAL BD-DhAAL Ostry, Jonathan. Is the Parallel Market Premium a Reliable Indicator of Real Exchange Rate Misalignment in Developing Countries / Jonathan Ostry, Peter Montiel. Washington, D.C. : International Monetary Fund, 1993. 1 online resource (26 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students It is often argued that the parallel market premium is a useful indicator of real exchange rate misalignment in developing countries. The empirical evidence does not, however, suggest the existence of a robust correlation between these two endogenous variables that is independent of the nature of economic shocks and various structural relationships in the economy. This paper presents an analytical investigation of the reliability of the parallel market premium as an indicator of real exchange rate misalignment in the context of a fully optimizing model of a developing country. The analysis suggests that one should exercise caution in drawing inferences about the sign and magnitude of real exchange rate misalignment from the parallel market premium. Mode of access: Internet Montiel, Peter. IMF Working Papers; Working Paper ; No. 1993/070 Full text available on IMF http://elibrary.imf.org/view/journals/001/1993/070/001.1993.issue-070-en.xml IMF e-Library