An Assessment of External Price Competitiveness for Mozambique

This paper conducts an assessment of external price competitiveness for Mozambique. A variety of indicators suggest that Mozambique has recently lost external price competitiveness with respect to its major trading partners. Consistent with these indicators, an exchange rate assessment indicates that the metical is overvalued by 26 to 41 percent in real effective terms. If sustained, an overvaluation of this magnitude has the potential to retard economic growth and jeopardize external stability, calling for an adjustment of monetary policy to gradually restore external price competitiveness.
Publication date: August 2009
ISBN: 9781451873122
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Money and Monetary Policy , Globalization , External price competitiveness , exchange rate assessment , macroeconomic balance approach , equilibrium real exchange rate approach , external sustainability approach , exchange rate , effective exchange rate , real effective exchange rate , current account balance

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