Anchor currency and real exchange rate dynamics in the CFA Franc zone

Cécile Couharde (), Issiaka Coulibaly () and Olivier Damette

Economic Modelling, 2013, vol. 33, issue C, 722-732

Abstract: Currency misalignments have been one of the focal points of interest in the literature devoted to the CFA Franc zone. Less attention has been paid, however, to the convergence process of real exchange rates towards equilibrium. In this paper, we analyze the short-run dynamics of real exchange rates of the CFA Franc zone countries and the role played by the anchor currency in their adjustment process. After controlling for the effects of the 1994 devaluation, we find the relationship between real exchange rates of the CFA Franc zone countries and of the euro to be substantial in size and subject to nonlinear effects.

Keywords: CFA zone; Misalignments; Panel smooth transition model (search for similar items in EconPapers)
JEL-codes: C23 F31 O1 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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Working Paper: Anchor currency and real exchange rates dynamics in the CFA Franc Zone (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:33:y:2013:i:c:p:722-732

DOI: 10.1016/j.econmod.2013.05.005

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