The Equilibrium Real Exchange Rate in a Commodity Exporting Country: Algeria's Experience

By Taline Koranchelian. Social Science Research Network, 2005

116 citations recorded by the source corpus.

Drawing on the existing literature, I estimate a long-run equilibrium real exchange rate path for Algeria. I find that the Balassa-Samuelson effect together with real oil prices explain the long-run evolution of the equilibrium real exchange rate in Algeria. The half-life of the deviation of the real exchange rate from the estimated equilibrium level is about nine months, similar to that in other commodity-exporting countries. The general conclusions are that: (i) there is a time-varying long-run equilibrium exchange rate in Algeria as in other commodity-exporting countries; and (ii) the real effective exchange rate of the Algerian dinar at end-2003 was broadly in line with this equilibrium.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/dc4aa514e8f0118a60ebb496f0d3c7e17fd0d7e9

Citations in the corpus

• Are There Oil Currencies? The Real Exchange Rate of Oil Exporting Countries (2007, unknown): “From a theoretical perspective, Krugman (1983) and Golub (1983) were the first to develop models in which shifts in oil prices generate wealth transfer effects and portfolio reallocations, leading to adjustments in exchange rates to clear asset markets.”