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Anchor currency and real exchange rate dynamics in the CFA Franc zone

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  • Couharde, Cécile
  • Coulibaly, Issiaka
  • Damette, Olivier

Abstract

Currency misalignments have been one of the focal points of interest in the literature devoted to the CFA Franc zone. Less attention has been paid, however, to the convergence process of real exchange rates towards equilibrium. In this paper, we analyze the short-run dynamics of real exchange rates of the CFA Franc zone countries and the role played by the anchor currency in their adjustment process. After controlling for the effects of the 1994 devaluation, we find the relationship between real exchange rates of the CFA Franc zone countries and of the euro to be substantial in size and subject to nonlinear effects.

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Bibliographic Info

Article provided by Elsevier in its journal Economic Modelling.

Volume (Year): 33 (2013)
Issue (Month): C ()
Pages: 722-732

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Handle: RePEc:eee:ecmode:v:33:y:2013:i:c:p:722-732

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Web page: http://www.elsevier.com/locate/inca/30411

Related research

Keywords: CFA zone; Misalignments; Panel smooth transition model;

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Cited by:
  1. Carl Grekou, 2014. "Revisiting the nexus between currency misalignments and growth in the CFA Zone," EconomiX Working Papers 2014-4, University of Paris West - Nanterre la Défense, EconomiX.

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