The Equilibrium Real Exchange Rate in a Commodity Exporting Country: Algeria's Experience
AbstractDrawing on the existing literature, I estimate a long-run equilibrium real exchange rate path for Algeria. I find that the Balassa-Samuelson effect together with real oil prices explain the long-run evolution of the equilibrium real exchange rate in Algeria. The half-life of the deviation of the real exchange rate from the estimated equilibrium level is about nine months, similar to that in other commodity-exporting countries. The general conclusions are that: (i) there is a time-varying long-run equilibrium exchange rate in Algeria as in other commodity-exporting countries; and (ii) the real effective exchange rate of the Algerian dinar at end-2003 was broadly in line with this equilibrium.
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Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 05/135.
Date of creation: 01 Jul 2005
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-10-22 (All new papers)
- NEP-CWA-2005-10-22 (Central & Western Asia)
- NEP-FMK-2005-10-22 (Financial Markets)
- NEP-IFN-2005-10-22 (International Finance)
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