Economic diversification and misalignment of the reer : comparative study Algeria Turkey (1980-2019)‎

Abstract EN

This paper aims to bounce back on the possibility of drawing inspiration from the Turkish example in an approach consisting in developing and strengthening the competitiveness of foreign trade while preserving the value and stability of the Algerian Dinar.

This was done by designing a VECM model, calculating the misalignment and determining the fundamentals that can have a direct link with the REER in Algeria compared to Turkey.

This modelling was designed with reference to what is stipulated in the BEER approach, which seems to be the most relevant approach for the case of emerging economies.

Obtained results reveal the important role of financial liberalization simultaneously with a diversification of the economy in the stability of the RER.

As Turkey has succeeded in recent years in diversifying its economy, it has recorded less misalignment of the REER of its currency comparing to the Algerian Dinar.