Exchange Rate Policies in Africa and the Requirements of Stabilization and Structural Adjustment

Abstract

In the late 1970s, flexible exchange rate policies were presented as one of the most appropriate means to remedy the lack of dynamism in some African economies. The present article examines to what degree the African authorities have been convinced by devaluationist arguments, and what results the application of this recommendation have produced. Part One is devoted to a review of various exchange rate determination systems. Part Two deals with exchange rate policy indicators and their expected impact on the evolution of macroeconomic variables. Part Three has an empirical character. It evaluates the intensity of nominal and real depreciations of African currencies and analyzes their impact on price changes, GDP, export and import volume, current account balances and public finance.