Citation:

Adnan Ahmed Esharif, Zouheir Abida. "Exchange Rate Misalignment and Economic Growth: The Case of Maghreb Countries" International Research Journal of Economics and Management Studies, Vol. 3, No. 4, pp. 138-149, 2024.

Abstract:

This study examines the impact of real exchange rate misalignment (RER) on long-term growth in Tunisia, Algeria, and Morocco, three countries that are part of the Maghreb region, between 2000 and 2020. In order to determine misalignment, we first estimate equilibrium RER using the Fundamental Equilibrium Exchange Rate (FEER) technique. Second, we estimate a dynamic panel growth model that incorporates our measure of misalignment with the conventional growth factors. According to the findings, there’s a negative coefficient for RER misalignment, indicating that long-term growth is either aided or hindered by a higher depreciated (or appreciated) RER. Consequently, the difference between RER and its equilibrium level would decrease under an adequate exchange rate strategy.

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[57] See appendix for data definitions and sources.

Keywords:

Equilibrium Real Exchange rate, Economic Growth, Misalignment.