Revisiting the nexus between currency misalignments and growth in the CFA Zone
Carl Grekou ()
No 2014-4, EconomiX Working Papers from University of Paris Nanterre, EconomiX
In this paper, we revisit the link between currency misalignments and economic growth by taking into account the foreign currency-denominated debt dynamics (except French Franc and euro) for the CFA zone countries over the period 1985-2011. Relying on a BEER approach and using panel cointegration techniques, we first derive currency misalignments. We then estimate a panel smooth transition growth equation that allows us to observe nonlinear impacts of misalignments on both economic growth and foreign currency-denominated debt dynamics. We find that the nonlinear impact of currency misalignments on growth through the competitiveness channel is mitigated by the foreign currency-denominated debt dynamics through a valuation effect.
Keywords: Currency misalignments; CFA zone; debt; economic growth; panel smooth transition regression. (search for similar items in EconPapers)
JEL-codes: C33 E42 F3 F43 (search for similar items in EconPapers)
Pages: 36 pages
New Economics Papers: this item is included in nep-fdg, nep-gro, nep-int and nep-mac
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Journal Article: Revisiting the nexus between currency misalignments and growth in the CFA Zone (2015)
Working Paper: Revisiting the nexus between currency misalignments and growth in the CFA Zone (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:drm:wpaper:2014-4
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