IMF Working Papers

FEER for the CFA Franc

By Charalambos G Tsangarides, Yasser Abdih

October 1, 2006

Download PDF More Formats on IMF eLibrary Order a Print Copy
More formats on IMF eLibrary Order a Print Copy

Preview Citation

Format: Chicago

Charalambos G Tsangarides, and Yasser Abdih. "FEER for the CFA Franc", IMF Working Papers 2006, 236 (2006), accessed July 11, 2025, https://doi.org/10.5089/9781451864960.001

Export Citation

  • ProCite
  • RefWorks
  • Reference Manager
  • BibTex
  • Zotero
  • EndNote
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

We apply the fundamentals equilibrium exchange rate (FEER) approach and the Johansen cointegration methodology to investigate the behavior of the real effective exchange rates of the two monetary unions of the CFA franc zone (CEMAC and WAEMU) vis-à-vis their long-run equilibrium paths. For both CEMAC and WAEMU, our results indicate that: (i) the fundamentals account for most of the fluctuation of the real effective exchange rates, with increases in the terms of trade, government consumption, and productivity improvements causing the exchange rate to appreciate, and increases in investment and openness leading to a depreciation; (ii) at end-2005 both the CEMAC and WAEMU real effective exchange rates were broadly in line with their long-run equilibrium values; and (iii) following a shock, reversion to equilibrium is twice as fast in WAEMU than in CEMAC.

Subject: Econometric analysis, Exchange rates, Foreign exchange, Government consumption, National accounts, Real effective exchange rates, Real exchange rates, Vector autoregression

Keywords: CEMAC, CEMAC adjustment speed, Central Africa, CFA franc, Cointegration, East Asia, Equilibrium real exchange rate, Exchange rates, FEER, Global, Government consumption, Impulse response function, Natural logarithm, Nominal exchange rate, Real effective exchange rates, Real exchange rates, Southeast Asia, Terms of trade, Vector autoregression, WAEMU, WAEMU REERs, West Africa, WP

Publication Details

You May Also Be Interested In...

Kiribati: Selected Issues

July 10, 2025

Islamic Republic of Mauritania: Fourth Reviews Under the Arrangements Under the Extended Credit Facility, and the Extended Fund Facility, Third Review Under the Resilience and Sustainability Facility, and Request for Rephasing of Access-Press Release; Staff Report; and Statement by the Executive Director for the Islamic Republic of Mauritania

July 8, 2025

Benchmarking Public Spending Efficiency in Education, Health, and Infrastructure in Ireland

July 8, 2025

Republic of Tajikistan: 2025 Article IV Consultation and Second Review under the Policy Coordination Instrument and Request for Modification of a Reform Target-Press Release; Staff Report; and Statement by the Executive Director for Republic of Tajikistan

July 8, 2025