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The Real Exchange Rate and External Competitiveness in Egypt, Morocco and Tunisia

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  • Zuzana Brixiova

    ()

  • Balázs Égert

    ()

  • Thouraya Hadj Amor Essid

Abstract

Egypt, Morocco and Tunisia face challenges competing on the global markets, as shown by their relatively low and stagnant export shares. The limited export competitiveness has hampered external demand, growth and employment. Applying, for the first time to North Africa, the stock-flow approach to the real equilibrium exchange rate, this paper evaluates the countries’ real exchange rate misalignments during the past three decades. While Egypt experienced periods of substantial misalignment, including in recent years, the exchange rates in Morocco and Tunisia have broadly reflected the underlying fundamentals. In all three countries structural factors are key to boosting exports, alongside of avoiding sizeable future misalignments. Intra-regional trade – both with North Africa and the rest of the continent – together with greater orientation to fast growing emerging markets could also raise countries’ external competitiveness.

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Paper provided by William Davidson Institute at the University of Michigan in its series William Davidson Institute Working Papers Series with number wp1068.

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Date of creation: 01 Jan 2014
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Handle: RePEc:wdi:papers:2014-1068

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Keywords: real exchange rate misalignment; stock-flow model; competitiveness; trade; Africa;

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  1. Hamid Faruqee, 1995. "Long-Run Determinants of the Real Exchange Rate: A Stock-Flow Perspective," IMF Staff Papers, Palgrave Macmillan, vol. 42(1), pages 80-107, March.
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  5. Hoda Selim, 2012. "Has Egypt'S Exchange Rate Policy Changed After The Float?," Middle East Development Journal (MEDJ), World Scientific Publishing Co. Pte. Ltd., World Scientific Publishing Co. Pte. Ltd., vol. 4(01), pages 1250005-1-1.
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  10. Stampini, Marco & Verdier-Chouchane, Audrey, 2011. "Labor Market Dynamics in Tunisia: The Issue of Youth Unemployment," IZA Discussion Papers 5611, Institute for the Study of Labor (IZA).
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  12. Frait, Jan & Komarek, Lubos & Meleck, Martin, 2006. "The Real Exchange Rate Misalignment in the Five Central European Countries," The Warwick Economics Research Paper Series (TWERPS), University of Warwick, Department of Economics 739, University of Warwick, Department of Economics.
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  14. Bouoiyour, Jamal & REY, Serge, 2005. "Exchange Rate Regime, Real Exchange Rate, Trade Flows and Foreign Direct Investments: The case of Morocco," MPRA Paper 38643, University Library of Munich, Germany.
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