807 research outputs found
Estimating Equilibrium Real Exchange Rates in the Franc Zone
No full textThis paper estimates the degree of real exchange rate misalignment in 12 CFA (Communauté Financière Africaine) franc zone countries over the period 1960--99. Allowing for contemporaneous error co-variances, due to observed cross-sectional dependence, we use seemingly unrelated regressions equation estimations to estimate the equilibrium real effective exchange rate and degree of misalignment in each country. We find significant differences across member-states, however, the largest economies--Cameroon, C�te d'Ivoire and Senegal--showed some striking similarities. Just prior to the 1994 devaluation, these three economies were much more overvalued compared with the smaller member-states, some of which were either marginally misaligned or virtually in equilibrium. In 1994, only C�te d'Ivoire is exactly in equilibrium as a result of the devaluation. Our analysis of misalignment for the period after 1994 suggests that some challenges lie ahead for the CFA franc zone, if fixed parity is to be maintained. Copyright 2008 The author 2008. Published by Oxford University Press on behalf of the Centre for the Study of African Economies. All rights reserved. For permissions, please email: [email protected], Oxford University Press.
The politics of monetary sector cooperation among the Economic Community of West African States members
No full textThe author tries to explain why monetary cooperation and integration have been difficulty to achieve among member states of the Economic Community of West African States (ECOWAS). He shows how different interest groups--both members and nonmembers--have over time influenced policies and positions on various ECOWAS member states. Unfortunately, most negotiations for cooperation among ECOWAS member states have a much better monetary cooperation and integration program, mainly because of France's active support and participation in negotiations, mediation, and consensus building. Unfortunately, Nigeria-which has been the main force behind bilingual regional integration in West Africa--has a different agenda from France. Its promotion of a bilingual economic grouping in West Africa was in part an attempt to reduce France's influence in West Africa, so France is unlikely to allow economic and monetary cooperation and integration along Nigerian lines. The fact that Nigeria is still a weak state does not help. The choice for francophone West African countries is therefore between closer ties with France--which has provided development aid, ensured currency convertibility, and guaranteed monetary stability in those francophone countries--and closer ties with Nigeria (which has done none of the above for itself, much less for its neighbors). The increasing convergence of macroeconomic indices among ECOWAS member countries--which is essential for monetary cooperation and integration--has come about largely because of events outside of ECOWAS or because of externally (International Monetary Fund) imposed structural adjustment programs. France's support is essential for the development of a meaningful ECOWAS.Payment Systems&Infrastructure,Earth Sciences&GIS,Economic Theory&Research,National Governance,Fiscal&Monetary Policy,National Governance,Trade and Regional Integration,Earth Sciences&GIS,TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT,Economic Theory&Research
Relative financial benefits of Swiss Franc and Euro-denominated mortgage loans in Poland
No full textThis paper evaluates financial benefits obtained by private clients of banks in Poland resulting from Swiss franc- and euro-denominated mortgage loans against Polish zloty mortgages. As fx mortgage loans were commonly used in period 2005-2009 and quickly dominated Polish banking sector (as well as sectors in many other CEE countries), they became a fundamental element of banks’ assets and a source of risk for borrowers. The main goal of the paper is to evaluate if fx mortgage loans, are more cost-efficient, than loans taken in domestic currency (PLN). To assess the financial benefits, the author proposed mathematical model of repayment of mortgage loans taken in the period 12.2004-12.2012 based on variable interest rates and actual exchange rates. Upon the data obtained from the model, the author used eight ratios for assessments of benefits. The analysis of benefits of fx borrowers was conducted per borrower, per period (month) as well as in form of cumulated benefits for all borrowers and all months of crediting. Upon the research one may find that since 2005 most beneficial in Poland are mortgage loans denominated in euro. They are generally more cost-effective than loans denominated in Polish zloty and most popular in period 2005-2009 fx loans in Swiss franc. The investigation of relative benefits showed also that the most commonly used fx loans denominated in Swiss currency are globally more expensive for borrowers than domestic currency loans. The exception are 30-years loans taken in 2009 and 2011
Exchange Rate and Inflation: France and Bulgaria in the Interwar Period
No full textThe objective of this paper is twofold. First, to compare the model of financial stabilization in the interwar period in France (a country in the “core”) with that in Bulgaria (a peripheral country). Second, applying modern econometric techniques (VAR models) we would like to “test “whether the theory designating a dominant role of the exchange rate on inflation (in comparison to that of money in circulation) holds and can be empirically proved by the actual movement of the monetary variables and the direction of their causality. Going back to the history of stabilization in France and Bulgaria in the interwar period and studying it through the theoretical ideas at the beginning of the XX century would provide us not only with new elements in the analysis of the present-day problems of monetary stabilizations but also add to the arguments of the crucial significance of the exchange rate and monetary rules for the efficiency and credibility of the monetary regime.economic history, modeling, France, Bulgaria
The impact of the strong euro on the real effective exchange rates of the two Francophone African CFA Zones
No full textThe author estimates the degree of misalignment of the CFA franc since the introduction of the euro in 1999. Using a relative purchasing power parity-based methodology, he develops a monthly panel time series dataset for both the Economic and Monetary Community of Central Africa (CEMAC) zone and the West African Economic and Monetary Union (UEMOA) zone to compute a trade-weighted real effective exchange rate indexed series from January 1999 to December 2004. The author's main finding is that the real effective exchange rate appreciated by close to 8 percent in UEMOA and 7 percent in CEMAC, influenced by volatility in the euro-dollar bilateral exchange rate and conservative monetary policies in the two zones, resulting in a partial loss of competitiveness in export markets. The lower appreciation in Central Africa can be explained by lower inflation in CEMAC than in UEMOA and by the greater trade with higher inflation East Asian countries, partially offset by the peg to the dollar. However, the inclusion of"unrecorded trade"results in an appreciation of only 6 percent in the UEMOA zone and 6 percent in the CEMAC zone due to higher inflation in the two countries with unmonitored cross-border flows, Ghana and Nigeria. Using time series econometrics, an Engle-Granger two stage procedure for cointegration, and an error correction framework, a single equation modeling of the real exchange rate from 1970 to 2005 as a function of terms of trade, economic openness, aid inflows, and a dummy representing the 1994 devaluation, the author finds little statistical evidence of a long-run equilibrium exchange rate that is a vector of economic fundamentals. The dummy explains most of the real exchange rate behavior in the two zones, while openness in UEMOA has contributed to an appreciation of the real effective exchange rate.Economic Stabilization,Economic Theory&Research,Macroeconomic Management,Fiscal&Monetary Policy,Free Trade
Why didn't France follow the British Stabilization after World War One?
No full textWe show that the size of the public debt, the budget deficit and the monetary overhang made it impossible for France to stabilize its price level and return to the pre-war parity immediately after World War I, even on the anti-keynesian assumption that a stabilization would not have had any negative effects on real income. The reason for the immediate postwar inflation then was not mismanaged policy but a wise choice in the French context. Nevertheless, a stabilization at a devalued franc which would have been substantially higher than the rate achieved by Poincar‚‚ in 1926 was historically possible in early 1924, and it would likely have benefited not only France but the entire international monetary system.
REPERES DE LA PLANIFICATION STRATÉGIQUE SOUTENABLE EN ROUMANIE
No full textThe author presents four important stages of strategical planning in Romania after 1990: Outline of the Transition to a Market Economy in Romania (1990); The National Strategy for the Lead-up to the Accession of Romania to the EU (1995); The National Strategy for Economic and Social Development of Romania, 2000-2004 (2000); The National Strategy for Sustainable Development of Romania on the 2025 Horizon (2004).The author presents the main characteristics of the above-mentioned exercises of strategical sustainable planning as well as the assessment of their impact on the Romanian society at the time they were drawn up and in the future.sustainable development
Membership in the CFA zone : Odyssean journey or Trojan horse?
No full textFor most of the 13 African members of the CFA Franc Zone, the 1980s have been a decade of slow or negative growth in per capita gross domestic product, worsening balance of payments, debt crises, financial crises declining competitiveness, and an apparent failure to adjust to the changed environment they inherited from the 1970s. This paper reassesses the costs and benefits of membership in the CFA Franc Zone in light of its members'poor performance in the 1980s. The assessment is based on comparisons of the members'performance indicators with indicators for comparator groups: other countries in sub-Saharan Africa, other low- and middle-income countries, and other exporters of fuel and primary goods. Performance indicators for members of the CFA Zone deteriorated more than indicators for other groups. Growth and investment rates fell more for CFA countries. This decline is attributed to the CFA members'declining competitiveness as other countries undertook adjustment programs that emphasized depreciation of the real exchange rate. The burden of adjustment appears to have fallen disproportionately on reduced spending, particularly reduced investment.Achieving Shared Growth,Environmental Economics&Policies,Macroeconomic Management,Economic Theory&Research,Economic Stabilization
The macroeconomics of monetary union:An analysis of the CFA Franc zone
No full textThis book applies contemporary macroeconomic theory and econometric modelling techniques in order to address policy issues relating to the CFA Franc Zone, a group of francophone African Countries sharing a common currency that is linked to the French Franc / Euro. Within this methodological framework, the author analyses the way in which the monetary institutions of the CFA influence macroeconomic development and policy formation.</p
Swiss franc mortgage loans – a threat or source of benefits to borrowers?
No full textThis paper relates to issues of hazard, risk and financial benefits generated by currency mortgage loans in Swiss franc granted in Poland. In particular, the paper focuses on situation of borrowers, especially describing hazards and financial benefits against financing in Polish currency. In the paper, the author presents in details the nature and role of currency mortgage loans in banking sector, as well as characterizes risk types burdening banks and borrowers of CHF loans. Also, the author prepared a comparative model of repayment of mortgage loans as well as investigated financial benefits obtained by Swiss franc borrowers in period 2006–2009 against Polish zloty borrowers.</p
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