Choosing Exchange Regimes in Oil-Exporting Countries:Frankel’s Proposal (CCB) versus the Actual Regime:The Case of Algeria (In Arabic)

Abderazak Madouri () and Hacene Kebir ()
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Abderazak Madouri: Research Center in Applied Economics for Development –CREAD-Algeria
Hacene Kebir: Research Center in Applied Economics for Development –CREAD-Algeria

No 1656, Working Papers from Economic Research Forum

Abstract: This paper analyzes the potential benefits of an alternative exchange rate regime proposed by Jeffrey Franke, called the Commodity-Currency Basket (CCB) regime, over the current exchange rate regime in Algeria. The CCB regime, which combines the advantages of both floating and fixed exchange rate systems, has been suggested as a way to mitigate the negative impacts of oil price volatility on the economies of countries that heavily rely on oil exports. We use wavelet analysis and quantile-on-quantile regression techniques to estimate and evaluate the impact of the CCB regime on internal and external balance indicators in Algeria, including inflation rates and foreign exchange reserves, over the period of 2001-2021. The findings suggest that the CCB regime is superior to the current floating exchange rate system in terms of maintaining monetary stability and achieving internal and external balance, while also providing more flexibility and stimulation to the domestic economy due to its ability to achieve terms of trade stability through an active countercyclical monetary policy. However, the proposed regime remains subject to further discussion, adjustment, experimentation, and development

Pages: 39
Date: 2023-11-20, Revised 2023-11-20
New Economics Papers: this item is included in nep-ara, nep-cba, nep-mon and nep-opm
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