In the presence of rigid prices, movements in the exchange rate help to absorb external shocks and to reduce changes in net exports. However, they also affect firms’ competitiveness, marginal costs, and labor demand. In countries where labor market institutions hinder wage adjustment (for...

The loss of export competitiveness recorded by the WAEMU zone in recent years has prompted studies on the quantification and implication of the degree of misalignment of the exchange rate on economic growth. Little research has, however, been interested by the impact of the degree of...

This paper highlights some of the theoretical and practical implications for monetary policy and exchange rates that derive specifically from the presence of a global general equilibrium factor embedded in neutral real policy rates in open economies. Using a standard two country DSGE model, we...