Exchange Rate Misalignment: An Application of the Behavioral Equilibrium Exchange Rate (Beer) to Botswana

31 Pages Posted: 21 Jun 2006

See all articles by Atsushi Iimi

Atsushi Iimi

International Monetary Fund (IMF); World Bank

Date Written: June 2006

Abstract

Botswana's successive currency devaluations and recent move from a fixed to a crawling peg exchange rate regime raise the question of whether the exchange rate might be misaligned with economic fundamentals. This paper, applying the behavioral equilibrium exchange rate (BEER) approach, analyzes the behavior of the real exchange rate for the period 1985-2004. It finds that the pula was undervalued in the later 1980s but overvalued in recent years. Some policy lessons from experiences in other countries with crawling peg arrangements are therefore considered in the context of Botswana.

Keywords: real effective exchange rates, crawling peg

JEL Classification: F31, F32, F41

Suggested Citation

Iimi, Atsushi, Exchange Rate Misalignment: An Application of the Behavioral Equilibrium Exchange Rate (Beer) to Botswana (June 2006). IMF Working Paper, Vol. , pp. 1-31, 2006. Available at SSRN: https://ssrn.com/abstract=910705

Atsushi Iimi (Contact Author)

International Monetary Fund (IMF)

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

World Bank ( email )

1818 H Street NW
Washington, DC 20433
United States

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