The real exchange rate and macroeconomic performance in Sub-Saharan Africa

Ghura, Dhaneshwar; Grennes, Thomas

doi:10.1016/0304-3878(93)90077-z

Cited by 238 publications

(166 citation statements)

References 17 publications

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“…25 Over this period, the estimated average overvaluation (based on Table 7) is signi…cantly higher in these three economies compared to other member states. The average overvaluation in Côte d'Ivoire over the period is found to be 6.8%, 5.8% in Cameroon and 5.0% in Senegal; above the relatively lower overvaluation esimated for other member states which average 1.1%.…”

Section: To 1993/4mentioning

confidence: 87%

Estimating Equilibrium Real Exchange Rates in the Franc Zone

Coleman

2008

Journal of African Economies

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In the CFA Franc zone of sub-Saharan Africa, the collective devaluation in 1994 remains the most important incident in its history. It sought to put an end to the worsening overall macroeconomic position of the zone. Using seemingly unrelated regression equations (SURE) analysis, this paper estimates the real e¤ective exchange rate and degree of misalignment in 12 Franc zone countries over the period 1960-99, allowing for contemporaneous error covariance due to observed cross-sectional dependence. The evidence suggests some signi…cant di¤erences among member states, however the largest economies -Cameroon, Côte d'Ivoire and Senegal -showed some striking similarities: just prior to the devaluation, they were much more overvalued relative to the smaller member states, most of which were either only marginally misaligned or virtually in equilibrium. In 1994, only Côte d'Ivoire is exactly in equilibrium as a result of the devaluation. Analysis of the post-1994 period suggests that some challenges lie ahead for the Franc zone, if …xed parity is to be maintained.

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Section: To 1993/4mentioning

confidence: 87%

Estimating Equilibrium Real Exchange Rates in the Franc Zone

Coleman

2008

Journal of African Economies

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“…Experiences of developing countries indicate that sizeable and protracted overvaluations are associated with slow growth (Edwards, 1988;Ghura and Grennes, 1993). What is less clear is whether undervaluation promotes growth (Galas and Lucinda, 2006;Rodrik, 2008;Rapetti et al, 2012), or is neutral/hampers it (Berg and Miao, 2010;Schöder, 2013).…”

Section: Misalignment and Growthmentioning

confidence: 99%

The Real Exchange Rate and Growth in Zimbabwe: Does the Currency Regime Matter?

Brixiová

Ncube

2014

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. www.econstor.eu The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent nonprofit organization supported by Deutsche Post Foundation. The center is associated with the University of Bonn and offers a stimulating research environment through its international network, workshops and conferences, data service, project support, research visits and doctoral program. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public. Terms of use: Documents in D I S C U S S I O N P A P E R S E R I E SIZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author. Zimbabwe faces growth and external competitiveness challenges, as indicated by its low trend growth and investment, declining share in the world exports, high current account deficits, and external debt. The stock-flow approach to the equilibrium exchange rate reveals that the real exchange rate experienced periods of sizeable overvaluation, both prior to the 2008 economic collapse and under the current multicurrency regime. While overvaluation hampers GDP growth, as well as growth and employment in export sectors, we have not found that undervaluation would raise it. Replacing the multicurrency regime anchored in the US$ by the South African rand as the sole transaction currency would help reduce overvaluation and stimulate exports and growth. Under any currency regime, Zimbabwe needs to adhere to sound macroeconomic policies, avoid overspending on public wages, and create environment conducive for investment.JEL Classification: F36, F41, C22, O11

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“…The RER misalignment, with weak relative prices, results in a decline of the industry profitability (Ghura and Grennes (1993)). The RER disequilibrium often takes the form of an overvaluation of the domestic prices that may adversely affect international trade of goods and services.…”

Section: Real Exchange Rate Misalignments and Economic Growthmentioning

confidence: 99%

The Effect of Exchange Rate Disequilibrium and Financial Integration on Economic Growth

Sarkar¹,

Amor²

2009

IJEF

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We identify the determinants of the equilibrium real exchange rates (RER) in 10 selected countries of South and South East Asia and estimate the RER distortion by testing the effect of international financial integration (IFI) on economic growth. We use a simple model that determines the equilibrium RER and a dynamic model of endogenous growth that traces the effect of the RER distortion. We applied the techniques of non-stationary dynamic panel, the tests of panel cointegration, and the method of least squared dynamics (DOLS) to estimate the relationship of cointegration. We also use the technique of Generalized Moments Method (GMM) in the system as applied to panel data to estimate the equation of dynamic growth. The IFI constitutes an important factor of long-term RER. An increase of it led to a long-term RER depreciation in the region. The evolution of the RER distortion for 1979-2004 was persevering and recurring: it was an alternation between periods of RER overvaluation and undervaluation in the region. The RER fluctuation in the short-term played against economic growth.

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The real exchange rate and macroeconomic performance in Sub-Saharan Africa

Cited by 238 publications

References 17 publications

Estimating Equilibrium Real Exchange Rates in the Franc Zone

Estimating Equilibrium Real Exchange Rates in the Franc Zone

The Real Exchange Rate and Growth in Zimbabwe: Does the Currency Regime Matter?

The Effect of Exchange Rate Disequilibrium and Financial Integration on Economic Growth

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