(جامعة الوادي University of Eloued, 2015-06-30) Madouni, Mourad
he purpose of this paper is to estimate the Equilibrium real exchange rate (ERER) of the Algerian
Dinar, from 1980 to 2012 by applying the Edward’s model (1989) and Elbadawi (1994) and asses the
degree of misalignment. We will use a co-integration method in order to see whether there is a long run
relationship between the ERER and its fundamentals such as: terms of trade, import tariffs or openness
and for the adjustment in the short run the Error Correction Model (ECM) is used. Our findings are an
increase in the oil prices or an improvement in terms of trade of one percent is associated with an
appreciation of the REER of about 1,56 %. A decline in openness of one percent appreciates of the REER
about 0,8%
