THE REAL EXCHANGE-RATE AND MACROECONOMIC PERFORMANCE IN SUB-SAHARAN AFRICA

Pooled time-series and cross-section data for 33 countries in Sub-Saha ran Africa (SSA) confirm the negative relationship between the real ex change rate (RER) misalignment and economic performance (economic grow th, imports, exports, saving and investment). Macroeconomic instabilit y also slows growth and other indicators of performance. Higher levels of misalignment are accompanied by higher levels of macroeconomic ins tability. Both lower levels of RER misalignment and instability lead t o better economic performance. The Edwards model of RER determination performs well for the region. Black market premia tend to show a great er degree of misalignment in RER than alternative measures.