Exchange Rate, Inflation and Competitive Power: An Analysis of the Relationship between Botswana's Exchange and Inflation Rates, and its Implication for the Competitive Strength of her Producers

"The present paper has grown out of two separate issues. These are, on the one hand, the specific preparations for a forthcoming reconstruction of the Macro Economic Model for Botswana (MEMBOT), and on the other, the general debate about Botswana's exchange rate regime. Responding to these issues, a simple exchange rate model was constructed, and used to analyse a number of alternative exchange rate scenarios. In the first instance these efforts were undertaken in order to examine the feasibility of including a separate exchange rate sub-model in the MEMBOT project."