Real exchange rate equilibrium and misalignment in kenya

Abstract

This paper examines Real Exchange Rates (RER) misalignment in Kenya by using Johansen Cointegration and error correction technique based on single equation and Vector Autoregressive (VAR) specification. It was found that actual RER was more often above its equilibri um value for the study period of June 1993 – December 2009 and the country’s international competitiveness deteriorated over the study period