Academic Editor: Youssef EL FOUTAYENI
Received |
Accepted |
Published |
05 January 2020 |
20 January 2020 |
10 March 2020 |
Abstract: Our goal is to assess the impact of the newly introduced flexible exchange rate in Morocco on the national currency misalignment. Our methodology consists on using vector error correction model to exhibit a relationship between dirham’s misalignment and various macroeconomic aggregates based on a 28 years’ time series of financial DATA. Our main finding is that the new exchange rate regime can help reduce the misalignment as larger fluctuation bands may help the local currency depreciate toward its real value. Another finding is that increases in GDP, Net balance of Payments and inflation help reduce misalignment of the dirham in the long run with different pace. We also present some key policy implications for both investors and monetary authorities based on our findings
