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The Impact of the Strong Euro on the Real Effective Exchange Rates of the Two Francophone African CFA Zones

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dc.contributor.authorZafar, Ali
dc.date.accessioned2012-06-20T17:37:49Z
dc.date.available2012-06-20T17:37:49Z
dc.date.issued2005-10
dc.description.abstractThe author estimates the degree of misalignment of the CFA franc since the introduction of the euro in 1999. Using a relative purchasing power parity-based methodology, he develops a monthly panel time series dataset for both the Economic and Monetary Community of Central Africa (CEMAC) zone and the West African Economic and Monetary Union (UEMOA) zone to compute a trade-weighted real effective exchange rate indexed series from January 1999 to December 2004. The author's main finding is that the real effective exchange rate appreciated by close to 8 percent in UEMOA and 7 percent in CEMAC, influenced by volatility in the euro-dollar bilateral exchange rate and conservative monetary policies in the two zones, resulting in a partial loss of competitiveness in export markets. The lower appreciation in Central Africa can be explained by lower inflation in CEMAC than in UEMOA and by the greater trade with higher inflation East Asian countries, partially offset by the peg to the dollar. However, the inclusion of "unrecorded trade" results in an appreciation of only 6 percent in the UEMOA zone and 6 percent in the CEMAC zone due to higher inflation in the two countries with unmonitored cross-border flows, Ghana and Nigeria. Using time series econometrics, an Engle-Granger two stage procedure for cointegration, and an error correction framework, a single equation modeling of the real exchange rate from 1970 to 2005 as a function of terms of trade, economic openness, aid inflows, and a dummy representing the 1994 devaluation, the author finds little statistical evidence of a long-run equilibrium exchange rate that is a vector of economic fundamentals. The dummy explains most of the real exchange rate behavior in the two zones, while openness in UEMOA has contributed to an appreciation of the real effective exchange rate.en
dc.identifierhttp://documents.worldbank.org/curated/en/2005/10/6341238/impact-strong-euro-real-effective-exchange-rates-two-francophone-african-cfa-zones
dc.identifier.doi10.1596/1813-9450-3751
dc.identifier.urihttps://hdl.handle.net/10986/8532
dc.languageEnglish
dc.publisherWorld Bank, Washington, DC
dc.relation.ispartofseriesPolicy Research Working Paper; No. 3751
dc.rightsCC BY 3.0 IGO
dc.rights.holderWorld Bank
dc.rights.urihttp://creativecommons.org/licenses/by/3.0/igo/
dc.subjectAVERAGE INFLATION
dc.subjectBALANCE OF PAYMENTS
dc.subjectBASE YEAR
dc.subjectBRAZILIAN REAL
dc.subjectCANADIAN DOLLAR
dc.subjectCAPITAL ACCOUNT
dc.subjectCAPITAL FLOWS
dc.subjectCENTRAL BANK
dc.subjectCENTRAL BANKS
dc.subjectCHANGES IN TRADE
dc.subjectCHINESE YUAN
dc.subjectCOMMON CURRENCY
dc.subjectCOMPETITIVENESS
dc.subjectCONSUMER PRICE INDEX
dc.subjectCONVERTIBILITY
dc.subjectCOUNTRY MARKETS
dc.subjectCURRENT ACCOUNT
dc.subjectCURRENT ACCOUNT DEFICIT
dc.subjectCURRENT ACCOUNTS
dc.subjectDEBT
dc.subjectDEFLATION
dc.subjectDEVALUATION
dc.subjectDEVELOPING COUNTRIES
dc.subjectDEVELOPING COUNTRY
dc.subjectDISEQUILIBRIUM
dc.subjectDOMESTIC PRICE
dc.subjectDOMESTIC PRICE INDEX
dc.subjectDOMESTIC PRICES
dc.subjectDUTCH DISEASE
dc.subjectECONOMETRIC ANALYSES
dc.subjectECONOMETRICS
dc.subjectECONOMIC ANALYSIS
dc.subjectECONOMIC GROWTH
dc.subjectECONOMIC HISTORIANS
dc.subjectECONOMIC PERFORMANCE
dc.subjectELASTICITY
dc.subjectEQUILIBRIUM
dc.subjectEURO
dc.subjectEXCHANGE RATE
dc.subjectEXCHANGE RATE APPRECIATION
dc.subjectEXCHANGE RATE INDEXES
dc.subjectEXCHANGE RATE POLICY
dc.subjectEXCHANGE RATE REGIME
dc.subjectEXCHANGE RATE REGIMES
dc.subjectEXPORT MARKETS
dc.subjectEXPORT PRICES
dc.subjectEXPORTS
dc.subjectFISCAL BALANCE
dc.subjectFIXED EXCHANGE RATE
dc.subjectFIXED EXCHANGE RATES
dc.subjectFLEXIBLE EXCHANGE RATES
dc.subjectFOREIGN CURRENCY
dc.subjectFOREIGN EXCHANGE
dc.subjectFREE TRADE
dc.subjectFREE TRADE ZONES
dc.subjectFULL EMPLOYMENT
dc.subjectGDP
dc.subjectGLOBAL TRADE
dc.subjectGOVERNMENT CONSUMPTION
dc.subjectIMPACT OF TRADE
dc.subjectIMPORT PRICES
dc.subjectINCOME
dc.subjectINCOME DEVELOPING COUNTRIES
dc.subjectINCOME ELASTICITIES
dc.subjectINDONESIAN RUPIAH
dc.subjectINDUSTRIAL COUNTRIES
dc.subjectINFLATION
dc.subjectINFLATION RATE
dc.subjectINFLATION RATES
dc.subjectINSTITUTIONAL ARRANGEMENTS
dc.subjectINTEREST RATE
dc.subjectINTERNATIONAL MARKETS
dc.subjectINTERNATIONAL MONETARY FUND
dc.subjectINTERNATIONAL RESERVES
dc.subjectJAPANESE YEN
dc.subjectKOREAN WON
dc.subjectM1
dc.subjectMACROECONOMIC BALANCE
dc.subjectMACROECONOMIC MANAGEMENT
dc.subjectMACROECONOMIC POLICY
dc.subjectMACROECONOMIC STABILITY
dc.subjectMACROECONOMIC VARIABLES
dc.subjectMACROECONOMICS
dc.subjectMARKET CONFIDENCE
dc.subjectMARKET SHARES
dc.subjectMONETARY POLICIES
dc.subjectMONETARY POLICY
dc.subjectMONETARY UNION
dc.subjectNET INCOME
dc.subjectNIGERIAN NAIRA
dc.subjectNOMINAL EXCHANGE RATE
dc.subjectOPENNESS
dc.subjectOVERVALUATION
dc.subjectPEGS
dc.subjectPOLICY RESEARCH
dc.subjectPOVERTY REDUCTION
dc.subjectPRICE OF IMPORTS
dc.subjectPRICE STABILITY
dc.subjectPURCHASING POWER
dc.subjectPURCHASING POWER PARITY
dc.subjectREAL EFFECTIVE EXCHANGE RATES
dc.subjectREAL EXCHANGE
dc.subjectREAL EXCHANGE RATE
dc.subjectREAL EXCHANGE RATES
dc.subjectREAL GDP
dc.subjectREAL OUTPUT
dc.subjectREGIONAL INTEGRATION
dc.subjectRELATIVE PRICES
dc.subjectSCENARIOS
dc.subjectSTABLE EXCHANGE RATE
dc.subjectTERMS OF TRADE
dc.subjectTERMS OF TRADE SHOCKS
dc.subjectTHAI BAHT
dc.subjectTIGHT MONETARY POLICY
dc.subjectTIME SERIES
dc.subjectTRADABLE GOODS
dc.subjectTRADE
dc.subjectTRADE BALANCE
dc.subjectTRADE DEFICIT
dc.subjectTRADE FLOWS
dc.subjectTRADE LIBERALIZATION
dc.subjectTRADE SHOCKS
dc.subjectTREASURY
dc.subjectVOLATILITY
dc.subjectWAEMU
dc.subjectWEALTH
dc.subjectWHOLESALE PRICE INDEX
dc.titleThe Impact of the Strong Euro on the Real Effective Exchange Rates of the Two Francophone African CFA Zonesen
dspace.entity.typePublication
okr.crossref.titleThe Impact Of The Strong Euro On The Real Effective Exchange Rates Of The Two Francophone African CFA Zones
okr.date.doiregistration2025-04-10T07:21:29.142411Z
okr.doctypePublications & Research::Policy Research Working Paper
okr.doctypePublications & Research
okr.docurlhttp://documents.worldbank.org/curated/en/2005/10/6341238/impact-strong-euro-real-effective-exchange-rates-two-francophone-african-cfa-zones
okr.globalpracticeMacroeconomics and Fiscal Management
okr.globalpracticeTrade and Competitiveness
okr.guid354601468192878241
okr.identifier.doi10.1596/1813-9450-3751
okr.identifier.externaldocumentum000016406_20051013150945
okr.identifier.internaldocumentum6341238
okr.identifier.reportWPS3751
okr.language.supporteden
okr.pdfurlhttp://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2005/10/13/000016406_20051013150945/Rendered/PDF/wps3751.pdfen
okr.region.administrativeAfrica
okr.topicEconomic Theory and Research
okr.topicMacroeconomics and Economic Growth::Macroeconomic Management
okr.topicMacroeconomics and Economic Growth::Economic Stabilization
okr.topicInternational Economics and Trade::Free Trade
okr.topicFiscal and Monetary Policy
okr.topicInternational Economics and Trade
okr.unitDevelopment Research Group (DECRG)
okr.volume1 of 1
relation.isSeriesOfPublication26e071dc-b0bf-409c-b982-df2970295c87
relation.isSeriesOfPublication.latestForDiscovery26e071dc-b0bf-409c-b982-df2970295c87
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