Estimating the Equilibrium Real Exchange Rate for Namibia
AbstractThis paper estimates the equilibrium real exchange rate and the resulting real exchange rate misalignment in Namibia during the period 1970 to 2004. The equilibrium real exchange rate is determined by trade and exchange restrictions (openness), terms of trade and ratio of investment to GDP. An increase in openness and ratio of investment to GDP cause the real exchange rate to appreciate. The real exchange rate was overvalued for almost the entire estimation period. It reached its equilibrium value in 1998. It is important to monitor the real exchange rate, and ensure that the divergence from the equilibrium value is minimised.
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Bibliographic InfoPaper provided by University of Pretoria, Department of Economics in its series Working Papers with number 200608.
Length: 17 pages
Date of creation: Feb 2006
Date of revision:
equilibrium real exchange rate; misalignment; cointegrating vector;
Find related papers by JEL classification:
- F31 - International Economics - - International Finance - - - Foreign Exchange
- F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
- C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models &bull Diffusion Processes
- C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
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- Ken Miyajima, 2007. "What Do We Know About Namibia's Competitiveness," IMF Working Papers 07/191, International Monetary Fund.
- World Bank, 2008. "Republic of Namibia - Addressing Binding Constraints to Stimulate Broad Based Growth : A Country Economic Report," World Bank Other Operational Studies 12601, The World Bank.
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