Zimbabwe: Recent Economic Developments, Selected Issues, and Statistical Appendix

International Monetary Fund

No 2001/013, IMF Staff Country Reports from International Monetary Fund

Abstract: The combination of wavering domestic policies, governance problems, and costly deployment of troops to support the Democratic Republic of Congo government has seriously affected economic performance and investor confidence. Exchange rate policy continues to be a key issue in Zimbabwe. This paper conducted an empirical analysis of the determinants of the equilibrium real exchange rate (ERER) for Zimbabwe. The results show that the overvaluation in Zimbabwe is sensitive to lax fiscal policy, suggesting that devaluation needs to be underpinned by a tightening of fiscal policy.

Keywords: ISCR; CR; ERER; exchange rate; Zimbabwe; base period; modeling framework; Zimbabwe's equilibrium real exchange rate; ERER analysis; appreciating equilibrium real exchange rate; Zimbabwe dollar; currency overvaluation; ERER equation; equilibrium ERER; model Based; Exchange rates; Real exchange rates; Tariffs; Currencies; Foreign assets; Southern Africa; Africa (search for similar items in EconPapers)
Pages: 84
Date: 2001-01-11
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