n African Finance Journal - Long-run real exchange rate movements in Africa : parallel market and official rates
|Article Title||Long-run real exchange rate movements in Africa : parallel market and official rates|
|© Publisher:||AfricaGrowth Institute|
|Journal||African Finance Journal|
|Publication Date||Jan 2000|
|Pages||1 - 14|
This paper poses the question whether parallel market and official real exchange rates in Africa behave in a manner consistent with the long-run purchasing power parity hypothesis. A recent econometric method, the panel unit root test, enables us to examine the long-run behaviours of real exchange rates by pooling the time-series data. Using data for 16 countries, our study concludes that the parallel market rates in Africa move consistently with the long-run PPP hypothesis, but the official rates follow a non-stationary process. This seems to suggest the existence of substantial parallel market premiums in Africa.
Article metrics loading...