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Foreign Aid Inflows And The Real Exchange Rate In The Cfa Franc Zone

Author

Listed:
  • Bazoumana Ouattara
  • Eric Strobl

Abstract

This paper presents an empirical analysis of the relationship between foreign aid inflows and the real exchange rate in the countries of the CFA Franc zone. Using panel data analysis we find that foreign aid inflows are associated with the appreciation of the real exchange rate in the CFA countries between 1980 and 2000. However, our results also suggest that the potential "Dutch Disease" effects associated with these inflows could be offset if appropriate policies are implemented.

Suggested Citation

  • Bazoumana Ouattara & Eric Strobl, 2008. "Foreign Aid Inflows And The Real Exchange Rate In The Cfa Franc Zone," Economie Internationale, CEPII research center, issue 116, pages 37-52.
  • Handle: RePEc:cii:cepiei:2008-4tb
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    File URL: http://www.cepii.fr/IE/rev116/ei116b.htm
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    Citations

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    Cited by:

    1. Emmanuel Owusu-Sekyere & Reneé van Eyden & Francis M Kemegue, 2014. "Remittances and the Dutch Disease in Sub-Saharan Africa: A Dynamic Panel Approach," Contemporary Economics, University of Finance and Management in Warsaw, vol. 8(3), September.
    2. repec:dau:papers:123456789/4066 is not listed on IDEAS
    3. Blaise Gnimassoun, 2017. "Exchange rate misalignments and the external balance under a pegged currency system," Review of International Economics, Wiley Blackwell, vol. 25(5), pages 949-974, November.
    4. David Fielding & Fred Gibson, 2013. "Aid and Dutch Disease in Sub-Saharan Africa," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 22(1), pages 1-21, January.
    5. Farid Makhlouf & Mazhar Mughal, 2013. "Remittances, Dutch Disease, And Competitiveness: A Bayesian Analysis," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 38(2), pages 67-97, June.
    6. repec:unu:wpaper:wp2012-26 is not listed on IDEAS
    7. Mariem Brahim & Nader Nefzi & Hamed Sambo, 2017. "Remittances and the real effective exchange rates in MENA countries: What is the long run impact?," CEPN Working Papers 2017-15, Centre d'Economie de l'Université de Paris Nord.
    8. Berg, Andrew & Portillo, Rafael & Zanna, Luis-Felipe, 2015. "Policy Responses to Aid Surges in Countries with Limited International Capital Mobility: The Role of the Exchange Rate Regime," World Development, Elsevier, vol. 69(C), pages 116-129.
    9. Mouhamadou Sy & Hamidreza Tabarraei, 2010. "Capital inflows and exchange rate in LDCs: The Dutch disease problem revisited," Working Papers halshs-00574955, HAL.
    10. Pedro Martins, 2011. "Do large capital inflows hinder competitiveness? The Dutch disease in Ethiopia," Post-Print hal-00748067, HAL.
    11. Mariem Brahim & Nader Nefzi & Hamed Sambo, 2017. "Remittances and the real effective exchange rates in MENA countries: What is the long run impact?," CEPN Working Papers hal-01583564, HAL.
    12. Blaise Gnimassoun, 2012. "Taux de change et mésalignements du franc CFA avant et après l’introduction de l’euro," EconomiX Working Papers 2012-3, University of Paris Nanterre, EconomiX.
    13. Li, Ying & Rowe, Francis, 2007. "Aid inflows and the real effective exchange rate in Tanzania," Policy Research Working Paper Series 4456, The World Bank.
    14. Mouhamadou Sy & Hamidreza Tabarraei, 2010. "Capital inflows and exchange rate in LDCs: The Dutch disease problem revisited," PSE Working Papers halshs-00574955, HAL.

    More about this item

    Keywords

    Aid; Panel Data; Real Exchange Rates;

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • F35 - International Economics - - International Finance - - - Foreign Aid

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