REER Imbalances and Macroeconomic Adjustments: evidence from the CEMAC zone

Simplice Asongu and Joseph Nnanna ()
Additional contact information
Joseph Nnanna: The Development Bank of Nigeria, Abuja, Nigeria

No 19/071, Working Papers of the African Governance and Development Institute. from African Governance and Development Institute.

Abstract: The EMU crisis holds special lessons for existing monetary unions. We assess the behavior of real effective exchange rates (REERs) of members of the Central African Economic and Monetary Community (CEMAC) zone with respect to their long-term equilibrium paths. A reduced form of the fundamental equilibrium exchange rate (FEER) model is estimated and associated misalignments. Our findings suggest that for majority of countries, macroeconomic fundamentals have the expected associations with the exchange rate fluctuations. The analysis also reveals that only the REER adjustments of Cameroon and Gabon are significant in restoring the long-term equilibrium in event of a shock. The Cameroonian economic fundamentals of terms of trade, government expenditure and openness have different long-term relations with the REER in comparison to those of other member states. There is no need for an adjustment in the level of the peg based on the present quantitative analysis of REER paths.

Keywords: Exchange rate; Macroeconomic impact; CEMAC zone (search for similar items in EconPapers)
JEL-codes: F31 F33 F42 F61 O55 (search for similar items in EconPapers)
Pages: 12
Date: 2019-01
New Economics Papers: this item is included in nep-mon and nep-opm
References: View references in EconPapers View complete reference list from CitEc
Citations:

Forthcoming: Foreign Trade Review

Downloads: (external link)
http://www.afridev.org/RePEc/agd/agd-wpaper/REER-I ... omic-Adjustments.pdf Revised version, 2019 (application/pdf)

Related works:
Journal Article: REER Imbalances and Macroeconomic Adjustments: Evidence from the CEMAC Zone (2020)
Working Paper: REER Imbalances and Macroeconomic Adjustments: evidence from the CEMAC zone (2019)
Working Paper: REER Imbalances and Macroeconomic Adjustments: evidence from the CEMAC zone (2019)
Working Paper: REER Imbalances and Macroeconomic Adjustments: evidence from the CEMAC zone (2019)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:agd:wpaper:19/071

Access Statistics for this paper

More papers in Working Papers of the African Governance and Development Institute. from African Governance and Development Institute. Contact information at EDIRC.
Bibliographic data for series maintained by Asongu Simplice ().