Determinants of Angola’s Parallel Market Real Exchange Rate

Jun Nagayasu and Enrique Gelbard

No 1999/090, IMF Working Papers from International Monetary Fund

Abstract: The paper estimates Angola’s equilibrium parallel market real exchange rate during the 1992–98 period. Using standard integration/co-integration techniques, the results fail to support the purchasing power parity hypothesis and indicate that two exogenous variables—the price of oil and the foreign interest rate—are able to explain most of the variation in the real exchange rate during the last seven years. These results contrast with the tenet that the parallel market exchange rate in Angola is solely influenced by monetary developments.

Keywords: WP; price level; real exchange rates; co-integration; exchange rate specification; time-series properties; PPP hypothesis; adjustment coefficient; market rate; world interest rate; Purchasing power parity; Multiple currency practices; Exchange rates; Exchange rate assessments (search for similar items in EconPapers)
Pages: 14
Date: 1999-07-01
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Citations: View citations in EconPapers (6)

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