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The Effects of Practices and Real Exchange Rate Misalignment and Economic Growth in the Maghreb Countries (Tunisia, Algeria, Morocco)

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  • Adnan Ahmed Esharif

Abstract

Purpose: The paper investigates the role of real exchange rate (RER) misalignment on long-run growth in three countries of the Maghreb countries (Tunisia, Algeria and Morocco) over the period 2000-2020. Design/Methodology/Approach: We first estimate equilibrium RER relying on the Fundamental Equilibrium Exchange Rate (FEER) approach, from which misalignment is derived. Second, we estimate a dynamic panel growth model in which among the traditional determinants of growth, our measure of misalignment is included. Findings: The results indicate that the coefficient for RER misalignment is negative, which means that a more depreciated (appreciated) RER helps (harms) long-run growth. Practical Implications: As a consequence, an appropriate exchange rate policy would close the gap between RER and its equilibrium level. Originality/Value: It has been approved as it is long recognized in academic and policy debates that domestic policies play an important role in explaining economic growth.

Suggested Citation

  • Adnan Ahmed Esharif, 2024. "The Effects of Practices and Real Exchange Rate Misalignment and Economic Growth in the Maghreb Countries (Tunisia, Algeria, Morocco)," International Journal of Finance, Insurance and Risk Management, International Journal of Finance, Insurance and Risk Management, vol. 14(3), pages 119-138.
    • Handle: RePEc:ers:ijfirm:v:14:y:2024:i:3:p:119-138
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    More about this item

    Keywords

    Equilibrium real exchange rate; economic growth; misalignment; panel cointegration tests.;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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