The Optimality of the Exchange Rate Regime in the Uemoa Zone

In our study, we addressed the issue of the exchange rate regime for the countries of the West African Economic and Monetary Union (WAEMU). Based on the method of Edwards (1989), we first estimated the equilibrium real exchange rate of the UEMOA zone by Ordinary Least Squares (OLS) from its determinants and then determined the vector of the optimal exchange rate of the UEMOA zone. We then analyzed the impact of the optimal exchange rate on the economic growth of WAEMU countries after having previously analyzed the impact of the current real exchange rate on the economic growth of WAEMU countries by Generalized Least Squares (GLS) with instrumental variables. These econometric studies showed that the optimal exchange rate obtained has a positive impact on the economic growth of WAEMU countries while the current real exchange rate has a negative impact on the economic growth of these countries.