The Equilibrium Exchange Rate of Mauritius: Evidence from Two Structural Models

17 Pages Posted: 26 Apr 2011 Last revised: 5 Mar 2013

See all articles by Camelia Minoiu

Camelia Minoiu

Federal Reserve Board

Patrick A. Imam

International Monetary Fund (IMF)

Date Written: January 25, 2011

Abstract

In this paper, we assess the equilibrium value of the Mauritian rupee in 2006-07 and over the medium run using two structural models. First, we derive a current account-based measure of the exchange rate equilibrium using the macroeconomic balance approach. Second, we estimate a reduced-form fundamental equilibrium exchange rate measure. Our results, which are robust to an alternative non-econometric approach, suggest that the Mauritian rupee was aligned with its equilibrium value in 2006-07 and little adjustment appeared necessary over the medium run.

Keywords: equilibrium real exchange rate, macroeconomic balance, fundamental equilibrium exchange rate, external sustainability, Mauritius

JEL Classification: F31, F41, E65

Suggested Citation

Minoiu, Camelia and Imam, Patrick A., The Equilibrium Exchange Rate of Mauritius: Evidence from Two Structural Models (January 25, 2011). Emerging Markets Finance and Trade, Vol. 47, No. 6. Available at SSRN: https://ssrn.com/abstract=1823382

Camelia Minoiu

Federal Reserve Board ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

Patrick A. Imam (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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