Real and nominal effective exchange rates for African countries

Abstract

The real effective exchange rate is an index that is used to measure international competitiveness of a country. While the International Monetary Fund constructs and publishes the index for all industrial and some newly industrialized countries, the African nations receive no such attention. In this article we construct quarterly indexes of real and nominal effective exchange rates over the 1971I–2004III period for 21 African countries. We hope by publishing this data set, more research attention will be given to these countries. As an application, we test for the stationarity of the real effective rates to show that the Purchasing Power Parity theory holds only in four of our 21 cases.

Notes

¹ Note that the bilateral nominal exchange rate between two non-dollar currencies is not available. Thus, they had to be generated using the rates against US dollar.

² For a debate and review article see Taylor and Taylor (2004) and Taylor (2003).

³ For a few other studies that have used different approach see Bwo-Nung (1996), Nachane (1997), Carrion-l-Silverstre et al . (2004), and Enders and Chumrusphonlert (2004).