The Parallel Market Premium and Exchange Rate Unification: a Macroeconomic Analysis for Zambia

Janine Aron () and Ibrahim A. Elbadawi

Chapter 8 in Parallel Exchange Rates in Developing Countries, 1997, pp 291-332 from Palgrave Macmillan

Abstract: Abstract The economy of Zambia, 1964–90, provides an example of a large and thriving black market for foreign exchange. The Zambian black market has survived a long sequence of policy reforms aimed at achieving a more flexible exchange rate and price system and liberalizing trade and financial flows. Despite aggressive policies in these areas, especially with regard to the exchange rate, the black market premium (defined as the ratio of the black rate to the official rate minus one) remains high. For the 1970–88 period, the premium averaged 100 percent; it exceeded 400 percent by 1990.

Keywords: Exchange Rate; Foreign Exchange; Real Exchange Rate; Black Market; Real Effective Exchange Rate (search for similar items in EconPapers)
Date: 1997
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-349-25520-7_9

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DOI: 10.1007/978-1-349-25520-7_9

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