Original Sin and Natural Hedge in CEMAC Area
The purpose of this article is to see whether export gains are likely to neutralize, even partially, the effect of the valuation of US dollar-denominateddebt in the EMCCA area. The aim is therefore to verify the effectiveness of the natural hedge. Taking the period 1995-2019, we use an empirical method 5based on the heterogeneous dynamic panel estimator with common-correlated effects. We find that the natural hedgeis inefficient, i.e., the export gains from nominal exchange rate changes do not cover the original sin valuation effect of these same changes. The results of our estimates call for a rethinking of the integration of EMCCA countries into world trade, given that an integration based on the development of large-scale exports is a sine qua non for the effectiveness of natural hedging.
