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Exchange Policy and Misalignments in Morocco: A Quantitative Analysis

Author

Listed:
  • Pascal Pouya

    (Macroeconomics and Public Policy Research Team, Faculty of Law, Economics and Social Sciences of Salé, Mohammed V University, Rabat, Morocco)

  • Mohamed Karim

    (Macroeconomics and Public Policy Research Team, Faculty of Law, Economics and Social Sciences of Salé, Mohammed V University, Rabat, Morocco)

  • Anass Arbia

    (Macroeconomics and Public Policy Research Team, Faculty of Law, Economics and Social Sciences of Salé, Mohammed V University, Rabat, Morocco)

  • Mohammed El Yazidi

    (Macroeconomics and Public Policy Research Team, Faculty of Law, Economics and Social Sciences of Salé, Mohammed V University, Rabat, Morocco)

  • Khalid Sobhi

    (Macroeconomics and Public Policy Research Team, Faculty of Law, Economics and Social Sciences of Salé, Mohammed V University, Rabat, Morocco)

Abstract

The research examines the equilibrium exchange rate and misalignment quantifications for the case of Morocco over the period 1990-2022. Based on an econometric model developed by Edwards in 1994, fundamental variables such as productivity, foreign direct investment (FDI), inflation and the real interest rate (RIR) are analysed to estimate the equilibrium value of the real exchange rate (REER) of the Moroccan dirham. The results show a cointegration between the REER and the fundamental variables, indicating the existence of a long-term relationship. The analysis of misalignments reveals periods of overvaluation and undervaluation of the Moroccan dirham, influenced by economic factors and monetary policies. This study has important implications for economic and monetary policy in Morocco, particularly with regard to export competitiveness and macroeconomic stability.

Suggested Citation

  • Pascal Pouya & Mohamed Karim & Anass Arbia & Mohammed El Yazidi & Khalid Sobhi, 2024. "Exchange Policy and Misalignments in Morocco: A Quantitative Analysis," International Journal of Economics and Financial Issues, Econjournals, vol. 14(4), pages 9-17, July.
    • Handle: RePEc:eco:journ1:2024-04-2
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Equilibrium Exchange Rate; Misalignment; Error Correction Model; Morocco;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • F31 - International Economics - - International Finance - - - Foreign Exchange

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