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The Equilibrium Real Exchange Rate in a Commodity Exporting Country: Algeria's Experience

Author/Editor: Koranchelian, Taline
Authorized for Distribution: July 1, 2005
Electronic Access: Free Full Text (PDF file size is 366KB)
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.

Summary: Drawing on the existing literature, I estimate a long-run equilibrium real exchange rate path for Algeria. I find that the Balassa-Samuelson effect together with real oil prices explain the long-run evolution of the equilibrium real exchange rate in Algeria. The half-life of the deviation of the real exchange rate from the estimated equilibrium level is about nine months, similar to that in other commodity-exporting countries. The general conclusions are that: (i) there is a time-varying long-run equilibrium exchange rate in Algeria as in other commodity-exporting countries; and (ii) the real effective exchange rate of the Algerian dinar at end-2003 was broadly in line with this equilibrium.
 
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Series: Working Paper No. 05/135
Subject(s): Exchange rates | Algeria | Commodities | Exports
Author's keyword(s): Algeria | equilibrium real exchange rate
 
English  
    Published:   July 1, 2005        
    ISBN/ISSN:   1934-7073   Format:   Paper
    Stock No:   WPIEA2005135   Pages:   18
    Price:   US$15.00 (Academic Rate: US$15.00 )
       
     
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