Estimating Egypt’s Equilibrium Real Exchange Rate

Estimating Egypt’s Equilibrium Real Exchange Rate PDF

Author: Mr.Joannes Mongardini

Publisher: International Monetary Fund

Published: 1998-01-01

Total Pages: 42

ISBN-13: 1451842155

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In light of the real appreciation of the Egyptian pound over the last six years and Egypt’s lackluster export growth, questions of external competitiveness and exchange rate policy have arisen. This paper sheds light on these issues by estimating empirically Egypt’s equilibrium real exchange rate, that is, the rate that is consistent with fundamentals. The results show that, while the real exchange rate was substantially overvalued before 1993, today it is only moderately above the equilibrium rate. Moreover, the analysis shows that the recent appreciation of the pound does not indicate a worsening misalignment.

Estimation of the Equilibrium Real Exchange Rate for Malawi

Estimation of the Equilibrium Real Exchange Rate for Malawi PDF

Author: Mr.Johan Mathisen

Publisher: International Monetary Fund

Published: 2003-05-01

Total Pages: 26

ISBN-13: 1451852789

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This paper computes Malawi's equilibrium real exchange rate as a function of its fundamentals as derived from economic theory. It finds evidence in favor of the equilibrium approach to exchange rate determination, with several variables (particularly government consumption and real per capita growth) found to drive movements in the time-varying equilibrium real exchange rate. The results also indicate that following a shock there is a rapid reversion of the real exchange rate to its time-varying equilibrium, with a half-life of reversion of about 11 months.

The Equilibrium Real Exchange Rate in a Commodity Exporting Country

The Equilibrium Real Exchange Rate in a Commodity Exporting Country PDF

Author: International Monetary Fund

Publisher: International Monetary Fund

Published: 2003-05-01

Total Pages: 23

ISBN-13: 1451851677

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Questions about external competitiveness, exchange rate misalignment, and the appropriate exchange rate policy feature prominently in the Russian policy debate. This paper furthers the debate by estimating empirically Russia's equilibrium real exchange rate (ERER)-that is, the rate consistent with the long-run economic fundamentals-and sheds light on the extent to which exchange rate policy should be changed. The paper confirms that the ERER reflects both productivity and the terms of trade. It suggests that Russia should target a significant medium-term current account deterioration and a real appreciation perhaps exceeding 10 percent. However, this latter number remains very sensitive to the assumed long-run oil prices.

Real Exchange Rate Behavior and Economic Growth

Real Exchange Rate Behavior and Economic Growth PDF

Author: Ghiath Shabsigh

Publisher: International Monetary Fund

Published: 1999-03

Total Pages: 30

ISBN-13:

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This paper examines the effect of the real exchange rate misalignment (RERMIS) on the collective economic growth of Egypt, Jordan, Morocco, and Tunisia. The paper constructs three measures of exchange rate misalignment based on purchasing power parity; a black market exchange rate; and a structured model. The empirical investigation confirmed the adverse effect of RERMIS on growth, using all measures of RERMIS, as predicted by endogenous growth models. The results also highlighted the role of other factors; specifically, capital growth and population have the theoretical signs predicted by the Solow growth model and are statistically significant.

External Shocks and the Real Exchange Rate

External Shocks and the Real Exchange Rate PDF

Author: Khalifa Hassanain

Publisher:

Published: 1997

Total Pages: 232

ISBN-13:

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In March 1990, the Government of Egypt (GOE) launched a comprehensive economic and social reform program (ERSAP) to strengthen Egypt's ongoing adjustment program. The reform program constituted a major break from the policies pursued in the past, and had the underlying objective of modernizing the country and improving living standards. While the program has scored many successes, many observers of the Egyptian economy believe that the real exchange rate (RE) is currently out of equilibrium. The RE prevailing in a country at any point in time is determined by two main factors: structural (e.g., external capital flows, changes in terms of trade, and commercial policy), and short run factors (macroeconomic policy in general). This study suggests and focuses on three of the structural factors that can affect the RE in Egypt. The first is the increase in the flow of foreign capital both public and private.

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