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The Relationship Between the Foreign Exchange Regime and Macroeconomic Performance in Eastern Africa
Author: Ms. Janet Gale Stotsky, Mr. Manuk Ghazanchyan, Mr. Olumuyiwa S Adedeji, and Mr. Nils O Maehlehttps://orcid.org/0000-0002-3135-5336
Series:
IMF Working Papers
Volume/Issue:
Volume 2012: Issue 148
Language:
English
Publication Date:
01 Jun 2012
DOI:
https://doi.org/10.5089/9781475504170.001
ISBN:
9781475504170
ISSN:
1018-5941
Pages:
54
Keywords:
WP; exchange rate regime; foreign exchange regime; regime classification; pass-through coefficient; Exchange rate reforms and regimes; growth; and inflation; low-inflation regime; descriptive analysis; overvalued exchange rates; Exchange rate arrangements; Inflation; Exchange rate pass-through; Exchange rates; East Africa
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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This study examines the relationship between the foreign exchange regime and macroeconomic performance in Eastern Africa. The study focuses on seven countries, five of which decisively liberalized their foreign exchange regimes. The study assesses the relationship between (i) growth and various determinants, including the exchange regime, the real exchange rate, and current account liberalization; and (ii) inflation and various determinants, including lagged inflation, the nominal exchange rate, the exchange regime, and liberalization. We find that in our sample, for the determinants of growth, investment and the real exchange rate are significant determinants but not the exchange regime or liberalization; and for inflation, the lagged inflation rate, nominal exchange rate, and the de facto regime are significant. Exchange rate pass-through is limited.
Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund