Floating Exchange Rate Regimes and Macroeconomic Indicators: Evidence from Mena Region and Outlook for the Moroccan Case

Abstract

Many emerging economies have significantly changed their economic policies by adopting floating exchange rate regimes. In this sense, we examine their effect on the Middle East North African (MENA) region, and based on similarities and differences in macroeconomic structure and fundamentals, the potential effect on the Moroccan economy would be projected. The study provides an overview of the MENA region's experience with exchange rate regimes, looking at their historical development and effects on regional economic stability and growth. If the adoption of floating exchange rate regimes for the emerging economies in the MENA region has benefits including enhanced flexibility, decreased vulnerability to external shocks, and increased competitiveness; however, the considered countries recognize difficulties in setting them up and running them, as well as the requirement for supportive policy measures. This paper underlines the significance of additional research to examine the effects of floating exchange rate regimes on other MENA economies, mainly Morocco, and to determine the most efficient policy measures to maximize the advantages of this regime.