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Exchange rate undervaluation and African surges: what do we learn from exported products?

Author

Listed:
  • Camille da Piedade
  • Luc Jacolin
  • Patrick Plane

Abstract

We investigate the role of undervaluation of African currencies in export “surges” of some primary and manufactured goods. We calculate country-product specific misalignments on the basis of the absolute purchasing power parity principle adjusted for the productivity level. Using a panel of 41 African countries and a basket of 149 primary and manufactured exported goods (4-digit HS code), we identify 96 export surges over the period 1995-2017. The complementary log-log (cloglog), which more appropriately treats rare events, brings to light undervaluation as an influential determinant for triggering an export surge then sustaining it over time. This effect is controlled for relevant covariates. Results prove robust to alternative calculations of export surges and to different estimators used in regression analyses.

Suggested Citation

  • Camille da Piedade & Luc Jacolin & Patrick Plane, 2022. "Exchange rate undervaluation and African surges: what do we learn from exported products?," Working papers 879, Banque de France.
    • Handle: RePEc:bfr:banfra:879
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    References listed on IDEAS

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    More about this item

    Keywords

    Exports Surges; Competitiveness; Exchange Rate Misalignements; Developing Countries;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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