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JOURNAL OF APPLIED BUSINESS AND ECONOMICS
Equilibrium Exchange Rate and Competitiveness in Morocco: Estimation by the ARDL Cointegration Model
Author(s): Ayoub Rabhi
Citation: Ayoub Rabhi, (2021) "Equilibrium Exchange Rate and Competitiveness in Morocco: Estimation by the ARDL Cointegration Model," Journal of Applied Business and Economics, Vol. 23, Iss.4, pp. 29-45
Article Type: Research paper
Publisher: North American Business Press
Abstract:
This study estimated the real equilibrium exchange rate and its misalignment by adopting the Natural Real Exchange Rate (NATREX) approach and ARDL cointegration model. The aim is to interpret the impact of the determinants used to estimate the equilibrium exchange rate and assess the importance of the exchange rate in the Moroccan economy through the evolution and the reaction of the trade balance vis-à-vis the misalignment. The results showed that the rise in terms of trade can have an impact on the appreciation of the exchange rate and constrain Moroccan exports. This evidence confirms indeed the importance of the exchange rate as an instrument of price competitiveness. The study also identified a competitiveness problem linked to the structure of the Moroccan economy showing an absence of the Blassa-Samuelson effect. The impact of public spending on the exchange rate shows a problem of the nature of this spending which is more oriented towards tradable goods contributing to higher imports and hence to the deterioration of the trade balance.
