The Equilibrium Real Exchange Rate of the Malagasy Franc : Estimation and Assessment

WPIEA0282003 Image
Price:  $15.00

Author/Editor: John Cady
Release Date: © February, 2003
ISBN : 978-1-45184-468-9
Stock #: WPIEA0282003
Stock Status: On back-order

Languages and formats available



Employing cointegration techniques, the long-run determinants of Madagascar's real exchange rate are examined from a stock-flow perspective. The long-run behavior of the real effective exchange rate is explained by the net foreign asset position and factors affecting trade flows. An index of the long-run equilibrium real exchange rate is developed to assess the degree of misalignment. The general conclusions are that the Malagasy franc has experienced significant misalignment in the past, but that the recent appreciation of the real effective exchange rate is consistent with changes in the fundamentals, particularly anticipated improvements in the net foreign assets position stemming from Madagascar's eligibility for assistance under the enhanced HIPC Initiative.

More publications in this series: Working Papers

More publications by: John Cady