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Estimation of a Behavioral Equilibrium Exchange Rate Model for Ghana

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Author Info

  • Elena Loukoianova
  • Plamen Iossifov

Abstract

The paper estimates a behavioral equilibrium exchange rate model for Ghana. Regression results show that most of the REER''s long-run behavior can be explained by real GDP growth, real interest rate differentials (both relative to trading-partner countries), and the real world prices of Ghana''s main export commodities. On the basis of these fundamentals, the REER in late 2006 was found to be very close to its estimated equilibrium level. The results also suggest, that deviations from the equilibrium path are eliminated within two to three years.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 07/155.

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Length: 21
Date of creation: 01 Jul 2007
Date of revision:
Handle: RePEc:imf:imfwpa:07/155

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Related research

Keywords: Export prices; Commodity prices; Economic models; reer; exchange rate; real effective exchange rate; effective exchange rate; real exchange rate; export commodities; exchange rates; equilibrium exchange rate; currency units; nominal effective exchange rate; foreign exchange; export market shares; export market; nominal exchange rate; real exchange rates; export growth; commodity exports; export performance; export price; exporting country; current exchange rates; exchange rate misalignment; nominal exchange rates; current account balance; capital flows; export base; exchange rate appreciation; exchange rate management; export price index; commodity export; countries ? exports;

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References

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  1. Charalambos G. Tsangarides & Yasser Abdih, 2006. "FEER for the CFA Franc," IMF Working Papers 06/236, International Monetary Fund.
  2. Cashin, Paul & Cespedes, Luis F. & Sahay, Ratna, 2004. "Commodity currencies and the real exchange rate," Journal of Development Economics, Elsevier, vol. 75(1), pages 239-268, October.
  3. Taline Koranchelian, 2005. "The Equilibrium Real Exchange Rate in a Commodity Exporting Country," IMF Working Papers 05/135, International Monetary Fund.
  4. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
  5. Ronald MacDonald, 1997. "What Determines Real Exchange Rates? The Long and Short of it," IMF Working Papers 97/21, International Monetary Fund.
  6. John Cady, 2003. "The Equilibrium Real Exchange Rate of the Malagasy Franc," IMF Working Papers 03/28, International Monetary Fund.
  7. Johansen, Soren & Juselius, Katarina, 1990. "Maximum Likelihood Estimation and Inference on Cointegration--With Applications to the Demand for Money," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 52(2), pages 169-210, May.
  8. Ronald MacDonald & Peter B. Clark, 1998. "Exchange Rates and Economic Fundamentals," IMF Working Papers 98/67, International Monetary Fund.
  9. Frankel, Jeffrey A. & Rose, Andrew K., 1995. "Empirical research on nominal exchange rates," Handbook of International Economics, in: G. M. Grossman & K. Rogoff (ed.), Handbook of International Economics, edition 1, volume 3, chapter 33, pages 1689-1729 Elsevier.
  10. Leslie Lipschitz & Donogh McDonald, 1991. "Real Exchange Rates and Competitiveness," IMF Working Papers 91/25, International Monetary Fund.
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Citations

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Cited by:
  1. Shehu Usman Rano, Aliyu, 2007. "Real Exchange Rate Misalignment: An Application of Behavioral Equilibrium Exchange Rate (BEER) to Nigeria," MPRA Paper 10376, University Library of Munich, Germany.
  2. Ho-don Yan & Cheng-lang Yang, 2012. "Does an Undervalued Currency Merit Economic Growth? – Evidence from Taiwan," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 59(1), pages 37-57, March.
  3. Dağdeviren, Sengül & Ogus Binatli, Ayla & Sohrabji, Niloufer, 2011. "Misalignment under different exchange rate regimes: the case of Turkey," MPRA Paper 46774, University Library of Munich, Germany.
  4. Gilles Duffrenot & Kimiko Sugimoto, 2010. "Pegging the future West African single currency in regard to internal/external competitiveness: a counterfactual analysis," William Davidson Institute Working Papers Series wp974, William Davidson Institute at the University of Michigan.
  5. Sosunov, K. & Ushakov, N., 2009. "Determination of the Real Exchange Rate of the Ruble and Assessment of Long-Run Policy of Real Exchange Rate Targeting," Journal of the New Economic Association, New Economic Association, issue 3-4, pages 97-121.
  6. Sossounov, Kirill & Ushakov, Nikolay, 2009. "Determination of the real exchange rate of rouble and assessment of long-rum policy of real exchange rate targeting," MPRA Paper 18549, University Library of Munich, Germany.

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