Competitiveness and the real exchange rate: the standpoint of countries in the CEMAC zone

This paper focuses on real exchange rate in the case of CEMAC countries. To analyze the situation in Cameroon, Central African Republic, Congo, Gabon and Chad we used annual data from 1979 to 2008. Two approaches were used related to equilibrium real exchange rate model based on fundamentals and calculations show that terms of trade, public expenditure, the degree of openness of the economy and productivity are the most important variables which influence the equilibrium of real exchange rate. Based on the estimated paths, there was a clear pattern of overvaluation before 1994, suggesting that the exchange rate adjustment was needed. Despite a relative appreciation trend during last years, the real exchange rate of CEMAC countries has not experienced an important overvaluation.