Estimation of the Equilibrium Real Exchange Rate for Malawi

Mathisen, Johan

Abstract

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Estimation of the Equilibrium Real Exchange Rate for Malawi

Johan Mathisen

International Monetary Fund (IMF)

May 2003

IMF Working Paper No. 03/104

Abstract:
This paper computes Malawi`s equilibrium real exchange rate as a function of its fundamentals as derived from economic theory. It finds evidence in favor of the equilibrium approach to exchange rate determination, with several variables (particularly government consumption and real per capita growth) found to drive movements in the time-varying equilibrium real exchange rate. The results also indicate that following a shock there is a rapid reversion of the real exchange rate to its time-varying equilibrium, with a half-life of reversion of about 11 months.

Number of Pages in PDF File: 25

Keywords: Malawi, Equilibrium Real Exchange Rate

JEL Classification: F31, F41

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Date posted: January 29, 2006

Suggested Citation

Mathisen, Johan, Estimation of the Equilibrium Real Exchange Rate for Malawi (May 2003). IMF Working Paper, Vol. , pp. 1-25, 2003. Available at SSRN: http://ssrn.com/abstract=879180

Contact Information

Johan Mathisen (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States