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Anchor currency and real exchange rate dynamics in the CFA Franc zone


  • Couharde, Cécile
  • Coulibaly, Issiaka
  • Damette, Olivier


Currency misalignments have been one of the focal points of interest in the literature devoted to the CFA Franc zone. Less attention has been paid, however, to the convergence process of real exchange rates towards equilibrium. In this paper, we analyze the short-run dynamics of real exchange rates of the CFA Franc zone countries and the role played by the anchor currency in their adjustment process. After controlling for the effects of the 1994 devaluation, we find the relationship between real exchange rates of the CFA Franc zone countries and of the euro to be substantial in size and subject to nonlinear effects.

Suggested Citation

  • Couharde, Cécile & Coulibaly, Issiaka & Damette, Olivier, 2013. "Anchor currency and real exchange rate dynamics in the CFA Franc zone," Economic Modelling, Elsevier, vol. 33(C), pages 722-732.
  • Handle: RePEc:eee:ecmode:v:33:y:2013:i:c:p:722-732 DOI: 10.1016/j.econmod.2013.05.005

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    References listed on IDEAS

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    Cited by:

    1. repec:bla:reviec:v:25:y:2017:i:5:p:949-974 is not listed on IDEAS
    2. Grekou, Carl, 2015. "Revisiting the nexus between currency misalignments and growth in the CFA Zone," Economic Modelling, Elsevier, vol. 45(C), pages 142-154.
    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.

    More about this item


    CFA zone; Misalignments; Panel smooth transition model;

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development


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