Exchange Rate Misalignment: An Application of the Behavioral Equilibrium Exchange Rate (BEER) to Botswana
IMF Working Papers, June 1, 2006
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Bibliographic details
- Authors: Atsushi Iimi
- Published: June 1, 2006
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451864007.001
Summary and key findings
- Applies the behavioral equilibrium exchange rate (BEER) approach to analyze the behavior of the real exchange rate for the period 1985-2004.
- Finds that the pula was undervalued in the later 1980s.
- Finds that the pula was overvalued in recent years (relative to the study period).
- Context: Botswana's successive currency devaluations and move from a fixed to a crawling peg exchange rate regime raise the question of potential misalignment with economic fundamentals.
- Considers policy lessons from experiences in other countries with crawling peg arrangements in the context of Botswana.
Methodology
- Empirical approach: behavioral equilibrium exchange rate (BEER).
- Sample period: 1985-2004.
Policy implications and discussion
- Evaluates exchange rate misalignment in light of Botswana's shift from a fixed to a crawling peg regime.
- Discusses policy lessons from other countries' experiences with crawling peg arrangements, applied to Botswana's context.