Exchange Rate Regime, Real Exchange Rate, Trade Flows and Foreign Direct Investments: The case of Morocco

Jamal Bouoiyour () and Serge Rey

MPRA Paper from University Library of Munich, Germany

Abstract: We study the behavior of the Real Effective Exchange Rate (REER) of the dirham against the European currencies (Europe of the 15), over the period 1960-2000 (annual data). We measure the volatility using standard deviation, and the misalignments as the difference between the actual REER and the equilibrium REER (NATREX model). We show that a rise of the volatility of the dirham reduces the trade flows (exports and imports). The misalignments affect also the trade flows: an overvaluation leads to a reduction in Morocco exports from, to a raise of Morocco imports, and globally to a deterioration of the trade balance with the European Union. On the other hand, neither the volatility nor the misalignments have an effect on the direct investments (FDI) in favor of Morocco.

Keywords: REER; NATRXE; FDI; Mesalignment Cointegration (search for similar items in EconPapers)
JEL-codes: C22 F21 (search for similar items in EconPapers)
Date: 2005
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Citations: View citations in EconPapers (28)

Published in African Review of Development 17.2(2005): pp. 302-334

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Journal Article: Exchange Rate Regime, Real Exchange Rate, Trade Flows and Foreign Direct Investments: The Case of Morocco (2005)
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