Real Exchange Rate Misalignment in the cfa franc zone after the cfa franc devaluation of January 1994

Kuikeu, Oscar (2013): Real Exchange Rate Misalignment in the cfa franc zone after the cfa franc devaluation of January 1994.

Abstract

In cfa franc zone, the exchange rate was devalued, in January 1994, in order to deal with the major macroeconomic imbalances that have affected the members during the 1980 decade. Thus, the aim of this paper is to assess the degree of over/undervaluation (namely real exchange rate misalignment) of the currency in the cfa franc zone since the cfa franc devaluation of January 1994.

• Item Type: MPRA Paper
• Language: English
• Keywords: equilibrium real exchange rate, cfa franc zone, cointegration, panel
• Subjects: C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models ; Multiple Variables > C33 - Panel Data Models ; Spatio-temporal Models; F - International Economics > F3 - International Finance > F31 - Foreign Exchange

References

Baffes, J., Elbadawi, I. and O’Connel, S. (1999) ‘Single equation estimation of the equilibrium real exchange rate’, in Exchange rate misalignment : concepts and measurement for developing countries, L. Hinkle et P. Montiel (eds), World Bank Research Publication.

Clark, P. and MacDonald, R. (1998) ‘Exchange rate and economic fundamentals – A methodological comparison of BEERs and FEERs’, IMF Working Papers, No. 98/67, International Monetary Fund.

Edwards, S. (1989) Real exchange rates, Devaluation and adjustment : Exchange rate policy in developing countries, MIT Press, Cambridge, Massachussetts.

Harris and Tzavalis (1999) ‘Inference for unit roots in dynamic panels where the time dimension is fixed’. Journal of Econometrics, vol 91, pp 201–226.

Im, Pesaran and Shin (2003) ‘Testing for Unit Roots in Heterogeneous Panels’, Journal of Econometrics, , vol 115, pp 53-74.

Levin, Lin and Chu (2002), ‘Unit root tests in panel data : Asymptotic and finite-sample properties’, Journal of Econometrics, vol 108, pp 1–24.

MacDonald, R. (1997) ‘What determines real exchange rates ? The long and short of it’, IMF Working Paper, No. 97/21, International Monetary Fund.

Montiel, P.J. (1999) ‘Determinants of the long – run equilibrium real exchange rate : An analytical model’ in Exchange rate misalignment :Concepts ad measurement for developing countries, L. Hinkle and P. Montiel (eds), World Bank Research Publication.

Nurkse, R. (1945) ‘Conditions of international monetary equilibrium’ in Essays in International Finance 4, Princeton University Press, International Finance Section, New Jersey, USA.

Pedroni, P. (1995) ‘Panel Cointegration ; Asymptotic and Finite Sample Properties of Pooled Time Series Tests with an Application to the PPP Hypothesis’ Indiana University Working Papers in Economics, No. 95-013.

Pedroni, Peter (1999) ‘Critical Values for Cointegration Tests in Heterogeneous Panels with Multiple Regressors’ Oxford Bulletin of Economics and Statistics, vol 61, pp 653-70.