Distribution of parallel exchange rates in African countries

This paper investigates the distribution of parallel exchange rates in Afri can countries using exploratory data analysis techniques and model fitting. Stable laws are fitted to empirical distributions using the maximum likeli hood estimation method. Empirical evidence supports the stable hypothesis t hese distributions are positively skewed and have tails that are much heavi er than Gaussian counterparts. The stable hypothesis is further supported b y the "converging variance test," which suggests that these distributions h ave infinite variance. (C) 2001 Elsevier Science Ltd. All rights reserved.