Real exchange rate and asymmetric shocks in the West African Monetary Zone (WAMZ)

This paper examines real effective exchange rate (REER) responses to shocks in exchange rate determinants for the West African Monetary Zone (WAMZ) over the period 1980–2015. The analysis is based on a country-by-country VECM, and oil price, supply and demand shocks are identified using long run restrictions in a structural VAR model. We report significant differences in the response of REER to real oil price, productivity (supply) and demand preference shocks across these economies. In addition the relative contribution of these shocks to REER movements in the short and long run appears to be different across economies. Our findings suggest that the WAMZ countries are structurally different, and asymmetric shocks with inadequate adjustment mechanisms imply that a monetary union would be costly

Quantum Mechanics Unscrambled

Is quantum mechanics about 'states'? Or is it basically another kind of probability theory? It is argued that the elementary formalism of quantum mechanics operates as a well-justified alternative to 'classical' instantiations of a probability calculus. Its providing a general framework for prediction accounts for its distinctive traits, which one should be careful not to mistake for reflections of any strange ontology. The suggestion is also made that quantum theory unwittingly emerged, in Schroedinger's formulation, as a 'lossy' by-product of a quantum-mechanical variant of the Hamilton-Jacobi equation. As it turns out, the effectiveness of quantum theory qua predictive algorithm makes up for the computational impracticability of that master equation.Comment: 25 pages, no figures, final versio

Implications of real exchange rate misalignment in developing countries: theory, empirical evidence and application to growth performance in Zimbabwe

The influence of exchange rate signals in an economy is very powerful and often pervasive. Moreover, sustained real exchange rate overvaluation, will, by distorting resource allocation away from productive activities, eventually lead to drastic adjustments of relative prices and reduction of aggregate economic growth. However, the direct theoretical and empirical link between exchange rate misalignment and macroeconomic indicators still remains to be fully understood. Nonetheless, empirical studies continue to make attempts to understand this relationship by exploring relationships that incorporate different measures of exchange rate misalignment in traditional growth regression models. Thus, based on a behavioural equilibrium exchange rate derived measure exchange rate misalignment, this paper presents an empirical analysis of the relationship between real gross domestic product growth and real exchange rate misalignment for Zimbabwe. After controlling for other structural and policy variables, the main findings demonstrate that exchange rate misalignment exerts a negative and highly statistically significant impact on growth. Overall, the results lend support to the hypothesis that chronic real exchange rate overvaluation was a key fundamental behind the post-2000 economic growth contraction in Zimbabwe.Zimbabwe, Real exchange rate misalignment, exchange rate overvaluation, economic growth, growth performance

Business cycles and the optimum exchange rate of a small open economy : the case of Bahrain

This thesis utilizes time series techniques to investigate Bahraini business cycles and the optimality of Bahrain's exchange rate arrangements. To do so it is necessary to disaggregate the annual series of GDP, non-oil GDP, government expenditure, GDP deflator and non-oil GDP deflator into quarterly observations. The results on the business cycles show that the series of GDP, non-oil GDP and oil GDP have little persistence. Additionally, the results show that government expenditure is the only macro variable Granger causing non-oil business cycles and that the existing exchange rate regime does not Granger cause non-oil GDP. The survey on the optimum exchange rate literature shows that several of the theoretical exchange rate models are based on very strong assumptions that deter us from using them. The optimality of the Bahrain Dinar (BD) exchange rate regime is tested using an extended Horne-Martin approach. Further tests are carried out to examine the effects of the post-Bretton Woods exchange rate arrangements for the BD on the conduct of interest rate policy and domestic inflation. The results reveal that domestic interest rate policy is divorced from domestic fundamentals and that the post-Bretton Woods exchange rate arrangements did not inhibit domestic inflation from converging to the world average inflation rate. These results, plus those of chapter three, cast serious doubt on the optimality of the BD exchange rate arrangements. Indeed, the optimality test rejects the existing regime and shows that Bahrain cannot have an optimum peg regime. Thus the authorities have the option of floating the BD. However, the authorities may opt for a second best peg arrangement, but at the expense of obtaining counter intuitive results

Adjustment Policies and the Current Account Balance: Empirical Evidence from Sudan

The paper seeks to assess the impact of adjustment reforms on Sudan taking the current account balance as policy performance indicator. The paper shows that the government own reforms were more effective than those imposed by the IMF or the World Bank. It further illustrates that both policy and non-factors are responsible to the same degree in deriving current account deficit in the long run specifically inefficiency in exchange rate policy and structural and demographic factors.Political Economy,

Geometric Objects: A Quality Index to Electromagnetic Energy Transfer Performance in Sustainable Smart Buildings

Sustainable smart buildings play an essential role in terms of more efficient energy. However, these buildings as electric loads are affected by an important distortion in the current and voltage waveforms caused by the increasing proliferation of nonlinear electronic devices. Overall, buildings all around the world consume a significant amount of energy, which is about one-third of the total primary energy resources. Optimization of the power transfer process of such amount of energy is a crucial issue that needs specific tools to integrate energy-efficient behaviour throughout the grid. When nonlinear loads are present, new capable ways of thinking are needed to consider the effects of harmonics and related power components. In this manner, technology innovations are necessary to update the power factor concept to a generalized total or a true one, where different power components involved in it calculation, properly reflect each harmonic interaction. This work addresses an innovative theory that applies the Poynting Vector philosophy via Geometric Algebra to the electromagnetic energy transfer process providing a physical foundation. In this framework, it is possible to analyse and detect the nature of disturbing loads in the exponential growth of new globalized buildings and architectures in our era. This new insight is based on the concept of geometric objects with different dimension: vector, bivector, trivector, multivector. Within this paper, these objects are correlated with the electromagnetic quantities responsible for the energy flow supplied to the most common loads in sustainable smart buildings. Besides, it must be considered that these phenomena are characterized by a quality index multivector appropriate even for detecting harmonic sources. A numerical example is used to illustrate the clear capabilities of the suggested index when it applies to industrial loads for optimization of energy control systems and enhance comfort management in smart sustainable buildings