Camille da Piedade

Are the CFA francs at their equilibrium level?

Discussants : Edouard Mien and Jean-Louis Combes

Abstract

In the Franc Zone, the fixed parity of the CFA franc is debated again, while the eco, a substitute currency, is to be announced in the WAEMU. We investigate the question about the exchange rate misalignments in each of the two monetary unions (WAEMU, CEMAC) of this institutional space. Two estimation techniques are used on a panel of 99 countries over the period 1990-2016: the PPP exchange rate and the Behavioural Equilbrium Exchange rate (BEER). Results suggest variations across the analytical criteria, and differences between and within unions across member countries and sub-periods. Overall the end of the period does not show marked misalignments, but important national heterogeneities arise. Empirical results prove robust to the way we define the productivity effect and the sample we use.

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