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Florence Huart and Gaël Lagadec
 
''Current account balance and exchange rate adjustment in New Caledonia''
( 2013, Vol. 33 No.1 )
 
 
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
JEL: F3 - International Finance: General
F4 - Macroeconomic Aspects of International Trade and Finance: General
 
Manuscript Received : Jun 02 2012 Manuscript Accepted : Jan 14 2013

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