Current account balance and exchange rate adjustment in New Caledonia

Florence Huart and Gaël Lagadec ()
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Gaël Lagadec: University of New Caledonia

Economics Bulletin, 2013, vol. 33, issue 1, 113-125

Abstract: New Caledonia has a structural trade deficit. Public transfers from the French State amount to a large part of credits in the current account balance. The local currency, the franc XPF, has had a fixed parity against the euro since 1999. In prospect of independence, which would imply a loss (or decrease) of transfers received from metropolitan France, we evaluate what would be the required adjustment in the F.XPF/euro exchange rate in order to prevent the current account balance from worsening. Results mainly depend on the evolution of the price of nickel.

Keywords: equilibrium exchange rate; external constraint; foreign trade elasticities; devaluation; nickel (search for similar items in EconPapers)
JEL-codes: F3 F4 (search for similar items in EconPapers)
Date: 2013-01-14
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Citations: View citations in EconPapers (1)

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Working Paper: Current account balance and exchange rate adjustment in New Caledonia (2013)
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