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| Florence Huart and Gaël Lagadec |
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| ''Current account balance and exchange rate adjustment in New Caledonia'' |
| ( 2013, Vol. 33 No.1 ) |
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| 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. |
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| 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 |
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| Manuscript Received : Jun 02 2012 | | Manuscript Accepted : Jan 14 2013 |
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