## FEER for the CFA Franc

_IMF Working Papers, October 1, 2006_

## Source details

**Canonical URL:** [FEER for the CFA Franc](https://www.imf.org/en/publications/wp/issues/2016/12/31/feer-for-the-cfa-franc-19910)

## Other formats

- [Markdown version](/en/publications/wp/issues/2016/12/31/feer-for-the-cfa-franc-19910/index.md)
- [Structured JSON version](/en/publications/wp/issues/2016/12/31/feer-for-the-cfa-franc-19910/index.json)
- [Bundle manifest](/en/publications/wp/issues/2016/12/31/feer-for-the-cfa-franc-19910/bundle-manifest.json)

## Bibliographic details
- Authors: Charalambos G Tsangarides, Yasser Abdih
- Published: October 1, 2006
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451864960.001

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### Methodology and Scope
- 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.

### Key Findings
- 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:
  - Increases in the terms of trade cause the exchange rate to appreciate.
  - Increases in government consumption cause the exchange rate to appreciate.
  - Productivity improvements cause the exchange rate to appreciate.
  - Increases in investment lead to a depreciation.
  - Increases in openness lead to a depreciation.
- 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.

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## Content in this bundle

- **Appendix A: The CFA Franc Zone**
  - [Appendix A: The CFA Franc Zone (Markdown version)](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2006/_wp06236.pdf.md){rel="alternate" type="text/markdown"}
  - [Appendix A: The CFA Franc Zone (PDF)](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2006/_wp06236.pdf){rel="external" type="application/pdf"}

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/31/feer-for-the-cfa-franc-19910_