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Periodical article Periodical article Leiden University catalogue Leiden University catalogue WorldCat catalogue WorldCat
Title:On the Relation between Nominal Devaluation and Real Devaluation: Evidence from African Countries
Authors:Bahmani-Oskooee, MohsenISNI
Gelan, AberaISNI
Year:2007
Periodical:Journal of African Economies
Volume:16
Issue:2
Period:March
Pages:177-197
Language:English
Geographic term:Africa
Subjects:devaluation
Economics and Trade
External link:https://jae.oxfordjournals.org/content/16/2/177.full.pdf
Abstract:A country devalues its currency with an expectation that it will gain international competitiveness and increase its exports. However, the inflationary effects of devaluation could curtail its favourable effects unless nominal devaluation leads to real devaluation. The authors consider the experiences of 21 African countries. After constructing the real and nominal effective exchange rates over the 1971-2004 period, they employ the bounds-testing approach to cointegration and show that in almost all countries nominal devaluation leads to real devaluation in the short run. However, the short-run effects last into the long run only in three countries, viz. Burundi, Kenya and the Seychelles. Bibliogr., notes, ref., sum. [Journal abstract]
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