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

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

Camelia Minoiu

International Monetary Fund (IMF); University of Pennsylvania - Management Department; University of Pennsylvania - Wharton Financial Institutions Center

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

International Monetary Fund (IMF) ( email )

1700 19th Street, NW
Washington, DC USA 20431
United States
2026239731 (Phone)

HOME PAGE: http://https://sites.google.com/site/minoiucamelia/

University of Pennsylvania - Management Department ( email )

The Wharton School
Philadelphia, PA 19104-6370
United States

University of Pennsylvania - Wharton Financial Institutions Center ( email )

2306 Steinberg Hall-Dietrich Hall
3620 Locust Walk
Philadelphia, PA 19104
United States
2026830807 (Phone)

Patrick A. Imam (Contact Author)

International Monetary Fund (IMF) ( email )

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

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