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Estimating the Equilibrium Real Exchange Rate for Namibia

Author

Listed:
  • J. H. Eita

    () (Department of Economics, University of Pretoria)

  • Moses M. Sichei

    (Department of Economics, University of Pretoria)

Abstract

This 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.

Suggested Citation

  • J. H. Eita & Moses M. Sichei, 2006. "Estimating the Equilibrium Real Exchange Rate for Namibia," Working Papers 200608, University of Pretoria, Department of Economics.
  • Handle: RePEc:pre:wpaper:200608
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    Citations

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    Cited by:

    1. Ken Miyajima, 2009. "Namibia'S Real Exchange Rate Performance," South African Journal of Economics, Economic Society of South Africa, vol. 77(2), pages 228-244, June.
    2. Dağdeviren, Sengül & Ogus Binatli, Ayla & Sohrabji, Niloufer, 2011. "Misalignment under different exchange rate regimes: the case of Turkey," MPRA Paper 46774, University Library of Munich, Germany.
    3. repec:cii:cepiei:2012-q2-130-4 is not listed on IDEAS
    4. 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.
    5. Ken Miyajima, 2007. "What Do We Know About Namibia’s Competitiveness?," IMF Working Papers 07/191, International Monetary Fund.

    More about this item

    Keywords

    equilibrium real exchange rate; misalignment; cointegrating vector;

    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; 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; State Space Models

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