IDEAS home Printed from https://ideas.repec.org/a/spt/admaec/v13y2023i6f13_6_13.html
   My bibliography  Save this article

Analysis of the Influence of the Exchange Rate Reform and COVID-19 on the Real Exchange Rate of the Dirham using the BEER Methodology: Case of Morocco

Author

Listed:
  • Mohammed Adil ICHOU
  • Omar ALLAKI
  • Driss RASSAM
  • Mounssef BOUAYAD
  • Aziz BABOUNIA

Abstract

This article assesses the deviation of Morocco's real effective exchange rate (REER) from its equilibrium, in the wake of the reform of the exchange rate regime and the COVID-19 crisis. Adopting the BEER approach, we examine the evolution of the dirham and discern the internal and external factors influencing its deviation. After elucidating the concept of the equilibrium rate, we detail the methodology employed. Our conclusions reveal the notable impact of the 2018 reform on the REER, marked by the widening of the dirham's fluctuation band, inducing a significant depreciation. In addition, the pandemic has accentuated economic vulnerability, with a recession of -7.2% in 2020. In short, economic equilibrium is essential if Morocco is to face up to the challenges that lie ahead. Competitiveness indicators must be rigorously monitored to guarantee Morocco's competitive position internationally. Â

Suggested Citation

  • Mohammed Adil ICHOU & Omar ALLAKI & Driss RASSAM & Mounssef BOUAYAD & Aziz BABOUNIA, 2023. "Analysis of the Influence of the Exchange Rate Reform and COVID-19 on the Real Exchange Rate of the Dirham using the BEER Methodology: Case of Morocco," Advances in Management and Applied Economics, SCIENPRESS Ltd, vol. 13(6), pages 1-13.
    • Handle: RePEc:spt:admaec:v:13:y:2023:i:6:f:13_6_13
    as

    Download full text from publisher

    File URL: http://www.scienpress.com/Upload/AMAE%2fVol%2013_6_13.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Maurice Obstfeld & Kenneth S. Rogoff, 1996. "Foundations of International Macroeconomics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262150476, December.
    2. Bayoumi, Tamim & Eichengreen, Barry, 1998. "Exchange rate volatility and intervention: implications of the theory of optimum currency areas," Journal of International Economics, Elsevier, vol. 45(2), pages 191-209, August.
    3. Virginie Coudert & Cécile Couharde, 2009. "Currency Misalignments and Exchange Rate Regimes in Emerging and Developing Countries," Review of International Economics, Wiley Blackwell, vol. 17(1), pages 121-136, February.
    4. MacDonald, Ronald, 2000. "Concepts to Calculate Equilibrium Exchange Rates: An Overview," Discussion Paper Series 1: Economic Studies 2000,03, Deutsche Bundesbank.
    5. Mr. Ronald MacDonald & Mr. Peter B. Clark, 1998. "Exchange Rates and Economic Fundamentals: A Methodological Comparison of BEERs and FEERs," IMF Working Papers 1998/067, International Monetary Fund.
    6. John Williamson, 1994. "Estimating Equilibrium Exchange Rates," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 17, April.
    7. Hervé Joly & Alain Quinet & Nicolas Sobczak, 1998. "Taux de change et chômage : un exemple d'application de théorie du change réel d'équilibre," Revue Française d'Économie, Programme National Persée, vol. 13(3), pages 151-175.
    8. Bela Balassa, 1964. "The Purchasing-Power Parity Doctrine: A Reappraisal," Journal of Political Economy, University of Chicago Press, vol. 72(6), pages 584-584.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Michael Fidora & Claire Giordano & Martin Schmitz, 2021. "Real Exchange Rate Misalignments in the Euro Area," Open Economies Review, Springer, vol. 32(1), pages 71-107, February.
    2. Ramos-Herrera María del Carmen, 2022. "How Equilibrium Exchange Rate Misalignments Influence on Economic Growth? Evidence for European Countries," Economics - The Open-Access, Open-Assessment Journal, De Gruyter, vol. 16(1), pages 199-211, January.
    3. Anders Bergvall, 2004. "What Determines Real Exchange Rates? The Nordic Countries," Scandinavian Journal of Economics, Wiley Blackwell, vol. 106(2), pages 315-337, June.
    4. Couharde, Cécile & Delatte, Anne-Laure & Grekou, Carl & Mignon, Valérie & Morvillier, Florian, 2018. "EQCHANGE: A world database on actual and equilibrium effective exchange rates," International Economics, Elsevier, vol. 156(C), pages 206-230.
    5. Morvillier, Florian, 2020. "Do currency undervaluations affect the impact of inflation on growth?," Economic Modelling, Elsevier, vol. 84(C), pages 275-292.
    6. Claire Giordano, 2021. "How frequent a BEER? Assessing the impact of data frequency on real exchange rate misalignment estimation," Scottish Journal of Political Economy, Scottish Economic Society, vol. 68(3), pages 365-404, July.
    7. repec:zbw:bofitp:2004_001 is not listed on IDEAS
    8. Noureldin Diaa, 2018. "Much Ado about the Egyptian Pound: Exchange Rate Misalignment and the Path Towards Equilibrium," Review of Middle East Economics and Finance, De Gruyter, vol. 14(2), pages 1-19, August.
    9. Rubaszek, Michal, 2005. "Fundamental equilibrium exchange rate for the Polish zloty," MPRA Paper 126, University Library of Munich, Germany.
    10. Kenneth Clements & Yanrui Wu & Jing Zhang, 2006. "Comparing international consumption patterns," Empirical Economics, Springer, vol. 31(1), pages 1-30, March.
    11. Bergvall, Anders, 2002. "What Determines Real Exchange Rates? The Nordic Countries," Working Paper Series 2002:15, Uppsala University, Department of Economics.
    12. Ronald MacDonald, 2002. "Modelling the Long–run Real Effective Exchange Rate of the New Zealand Dollar," Australian Economic Papers, Wiley Blackwell, vol. 41(4), pages 519-537, December.
    13. Égert, Balázs, 2004. "Assessing equilibrium exchange rates in CEE acceding countries: can we have DEER with BEER without FEER? A critical survey of the literature," BOFIT Discussion Papers 1/2004, Bank of Finland Institute for Emerging Economies (BOFIT).
    14. Adu, Raymond & Litsios, Ioannis & Baimbridge, Mark, 2019. "Real exchange rate and asymmetric shocks in the West African Monetary Zone (WAMZ)," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 59(C), pages 232-249.
    15. Florian Morvillier, 2019. "Do currency undervaluations affect the impact of inflation on growth?," Post-Print hal-02138677, HAL.
    16. Cécile Couharde & Carl Grekou & Valérie Mignon, 2021. "MULTIPRIL, a New Database on Multilateral Price Levels and Currency Misalignments," International Economics, CEPII research center, issue 165, pages 94-117.
    17. Marit Hinnosaar & Hannes Kaadu & Lenno Uuskula, 2005. "Estimating the equilibrium exchange rate of the Estonian kroon," Bank of Estonia Working Papers 2005-2, Bank of Estonia, revised 10 Oct 2005.
    18. Cruz-Rodríguez, Alexis, 2015. "Tipo de cambio real en la República Dominicana: Enfoques alternativos de equilibrio y desalineamiento [Real exchange rate in the Dominican Republic: Alternative approaches to equilibrium and misali," MPRA Paper 70943, University Library of Munich, Germany.
    19. Rimgailaite, Ramune, 2012. "Exchange rate modelling for Lithuania and Switzerland," MPRA Paper 43451, University Library of Munich, Germany.
    20. Nilsson, Kristian, 2002. "Do Fundamentals Explain the Behavior of the Real Effective Exchange Rate?," Working Papers 78, National Institute of Economic Research.
    21. Martin Melecky, 2012. "Choosing The Currency Structure Of Foreign‐Currency Debt: A Review Of Policy Approaches," Journal of International Development, John Wiley & Sons, Ltd., vol. 24(2), pages 133-151, March.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spt:admaec:v:13:y:2023:i:6:f:13_6_13. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Eleftherios Spyromitros-Xioufis (email available below). General contact details of provider: http://www.scienpress.com/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.