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The Impact of Real Exchange Rate Misalignment and Instability on Macroeconomic Performance in Sub-Saharan Africa

Author

Listed:
  • Ghura, Dhaneshwar
  • Grennes, Thomas J.

Abstract

This study investigates the relationship between indicators of macroeconomic performance and real exchange rate (RER) misalignment and instability in Sub-Saharan Africa (SSA). Three measures of RER misalignment are used. There is ample evidence that countries which have pursued more predictable macroeconomic policies and lower levels of RER misalignment have experienced better economic performance. Also, it appears that higher levels of misalignments in the RER are accompanied by higher levels of macroeconomic instability. Empirical support is found for Edwards' model of the equilibrium RER and black market premia tend to show a greater degree of misalignment than alternative measures.

Suggested Citation

  • Ghura, Dhaneshwar & Grennes, Thomas J., 1991. "The Impact of Real Exchange Rate Misalignment and Instability on Macroeconomic Performance in Sub-Saharan Africa," Working Papers 51146, International Agricultural Trade Research Consortium.
    • Handle: RePEc:ags:iatrwp:51146
    DOI: 10.22004/ag.econ.51146
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    Cited by:

    1. Heisey, Paul W. & Mwangi, Wilfred, 1996. "Fertilizer Use and Maize Production in Sub-Saharan Africa," Economics Working Papers 7688, CIMMYT: International Maize and Wheat Improvement Center.
    2. Carl Grekou, 2015. "Currency misalignments and economic growth: the foreign currency-denominated debt channel," EconomiX Working Papers 2015-23, University of Paris Nanterre, EconomiX.
    3. Rashid M. Hassan & Arne Hallam, 1996. "Macro‐Economic Linkages To Agriculture: A General Equilibrium Model For Sudan," Journal of Agricultural Economics, Wiley Blackwell, vol. 47(1‐4), pages 66-88, January.
    4. Grekou, Carl, 2015. "Revisiting the nexus between currency misalignments and growth in the CFA Zone," Economic Modelling, Elsevier, vol. 45(C), pages 142-154.
    5. Elbadawi, Ibrahim A., 1992. "Real overvaluation, terms of trade shocks, and the cost to agriculture in sub-Saharan Africa," Policy Research Working Paper Series 831, The World Bank.

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