Exchange rate undervaluation and African surges: what do we learn from exported products?

Sous-évaluation du taux de change et poussées de croissance africaines: que nous apprennent les produits exportés ?

Camille da Piedade (), Luc Jacolin and Patrick Plane ()
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Camille da Piedade: CERDI - Centre d'Études et de Recherches sur le Développement International - IRD - Institut de Recherche pour le Développement - CNRS - Centre National de la Recherche Scientifique - UCA - Université Clermont Auvergne, World Bank Group
Patrick Plane: FERDI - Fondation pour les Etudes et Recherches sur le Développement International, CERDI - Centre d'Études et de Recherches sur le Développement International - IRD - Institut de Recherche pour le Développement - CNRS - Centre National de la Recherche Scientifique - UCA - Université Clermont Auvergne

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Abstract: We study the role of undervaluation of currency exchange rates in triggering African product export surges. Over the period 1995-2017, 96 episodes are identified for 41 African countries from a basket of their primary and manufactured exported goods (149 products, 4-digit HS code). We compute country-product specific real exchange rate misalignments, that allow testing the hypothesis that undervaluation drives competitiveness and thus export surges. The complementary log-log model confirms that product-specific undervaluation promotes the occurrence of surge episodes. This effect proves robust to the way we define export episodes, the introduction of covariates in the model, and the use of the Relogit as an alternative estimator for rare events.

Keywords: Africa; competitiveness; exchange rate; export surges; trade; undervaluation (search for similar items in EconPapers)
Date: 2024-12-16
Note: View the original document on HAL open archive server: https://cnrs.hal.science/hal-04840399v1
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Working Paper: Exchange rate undervaluation and African surges: what do we learn from exported products? (2022)
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