{
  "title": "FEER for the CFA Franc",
  "publication": "IMF Working Papers, October 1, 2006",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2016/12/31/feer-for-the-cfa-franc-19910",
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  "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.",
  "sections": [
    {
      "heading": "Methodology and Scope",
      "content": "- Applied the fundamentals equilibrium exchange rate (FEER) approach and the Johansen cointegration methodology.\n- Investigates the behavior of the real effective exchange rates (REERs) of the two monetary unions of the CFA franc zone: CEMAC and WAEMU, vis-à-vis their long-run equilibrium paths.\n- Subjects: Econometric analysis, Exchange rates, Foreign exchange, Government consumption, National accounts, Real effective exchange rates, Real exchange rates, Vector autoregression."
    },
    {
      "heading": "Key Findings",
      "content": "- Fundamentals account for most of the fluctuation of the real effective exchange rates for both CEMAC and WAEMU.\n- Determinants and their effects on the REER:\n  - Increases in the terms of trade cause the exchange rate to appreciate.\n  - Increases in government consumption cause the exchange rate to appreciate.\n  - Productivity improvements cause the exchange rate to appreciate.\n  - Increases in investment lead to a depreciation.\n  - Increases in openness lead to a depreciation.\n- At end-2005 both the CEMAC and WAEMU real effective exchange rates were broadly in line with their long-run equilibrium values.\n- Following a shock, reversion to equilibrium is twice as fast in WAEMU than in CEMAC.\n\n---\n\n Content in this bundle\n\n- Appendix A: The CFA Franc Zone\n  - Appendix A: The CFA Franc Zone (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Appendix A: The CFA Franc Zone (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/31/feer-for-the-cfa-franc-19910"
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    "Authors: Charalambos G Tsangarides, Yasser Abdih",
    "Published: October 1, 2006",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781451864960.001",
    "Applied the fundamentals equilibrium exchange rate (FEER) approach and the Johansen cointegration methodology.",
    "Investigates the behavior of the real effective exchange rates (REERs) of the two monetary unions of the CFA franc zone: CEMAC and WAEMU, vis-à-vis their long-run equilibrium paths.",
    "Subjects: Econometric analysis, Exchange rates, Foreign exchange, Government consumption, National accounts, Real effective exchange rates, Real exchange rates, Vector autoregression.",
    "Fundamentals account for most of the fluctuation of the real effective exchange rates for both CEMAC and WAEMU.",
    "Determinants and their effects on the REER:",
    "At end-2005 both the CEMAC and WAEMU real effective exchange rates were broadly in line with their long-run equilibrium values.",
    "Following a shock, reversion to equilibrium is twice as fast in WAEMU than in CEMAC.",
    "**Appendix A: The CFA Franc Zone**"
  ],
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