## Estimation of the Equilibrium Real Exchange Rate for Malawi

_IMF Working Papers, May 1, 2003_

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## Bibliographic details
- Authors: Johan Mathisen
- Published: May 1, 2003
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451852783.001

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### Summary and Core Findings
- The paper computes Malawi's equilibrium real exchange rate as a function of its fundamentals derived from economic theory.
- Evidence supports the equilibrium approach to exchange rate determination.
- Several variables, particularly government consumption and real per capita growth, are found to drive movements in the time-varying equilibrium real exchange rate.
- Following a shock there is a rapid reversion of the real exchange rate to its time-varying equilibrium, with a half-life of reversion of about 11 months.

### Methodology and Analytical Focus
- Equilibrium real exchange rate is modeled as a function of fundamentals as derived from economic theory.
- Time-varying equilibrium concept is emphasized, with analysis of drivers and dynamic reversion following shocks.

### Key Statistics and Publication Metadata
- Author: Johan Mathisen
- Publication date: May 1, 2003
- Series: Working Paper No. 2003/104
- Issue: 104
- Volume: 2003
- Pages: 25
- DOI: https://doi.org/10.5089/9781451852783.001
- Stock No: WPIEA1042003
- ISBN: 9781451852783
- ISSN: 1018-5941
- Exact quantified result: half-life of reversion of about 11 months

### Subjects and Keywords
- Subjects: Exchange rates; Foreign exchange; Government consumption; International trade; National accounts; Real effective exchange rates; Real exchange rates; Terms of trade
- Keywords: Africa; Equilibrium Real Exchange Rate; Exchange rates; expansionary fiscal policy; fiscal policy variable; Government consumption; Malawi; Malawi equilibrium exchange rate; nominal exchange rate depreciation; Real effective exchange rates; Real exchange rates; Terms of trade; utility function; WP

*Source: IMF Working Papers — "Estimation of the Equilibrium Real Exchange Rate for Malawi" by Johan Mathisen, May 1, 2003.*

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/30/estimation-of-the-equilibrium-real-exchange-rate-for-malawi-16543_