Read Estimating the Equilibrium Real Exchange Rate - An Application to Finland

Estimating the Equilibrium Real Exchange Rate - An Application to Finland

Tarhan Feyzioglu

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Description:There is a wealth of theoretical and empirical work on the determinants of the equilibrium real exchange rate. One important strand of the literature is associated with Williamson's seminal work (Williamson 1985), which has its roots in an approach developed at the IMF (Artus 1977).2 Williamson defines the fundamental equilibrium exchange rate, FEER, as the rate that is consistent with the simultaneous achievement of internal and external balance. Internal balance is defined as the level of economic activity that keeps the inflation rate constant. In Williamson's approach, the concept of external balance contains a normative element: the external position is balanced if the external current account (once adjusted for cyclical movements) can be regarded not only as sustainable (that is, meeting the country's intertemporal budget constraint), but also as "appropriate" (for example, based on desired levels of saving and investment). In order to determine the FEER, it is first necessary to formulate an econometric model for the trade sector that captures the relationships among output, current account, demand, and competitiveness. The FEER is then calculated as the exchange rate that maintains internal and external equilibrium. A critical summary of this approach by Black (1994) points out that serious questions remain concerning the normative choices on the model to be used, particularly the target for the current account.We have made it easy for you to find a PDF Ebooks without any digging. And by having access to our ebooks online or by storing it on your computer, you have convenient answers with Estimating the Equilibrium Real Exchange Rate - An Application to Finland. To get started finding Estimating the Equilibrium Real Exchange Rate - An Application to Finland, you are right to find our website which has a comprehensive collection of manuals listed.
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Pages: 25

Format: PDF, EPUB & Kindle Edition

Publisher: Not Avail

Release: 1997

ISBN: 6613796050

Description: There is a wealth of theoretical and empirical work on the determinants of the equilibrium real exchange rate. One important strand of the literature is associated with Williamson's seminal work (Williamson 1985), which has its roots in an approach developed at the IMF (Artus 1977).2 Williamson defines the fundamental equilibrium exchange rate, FEER, as the rate that is consistent with the simultaneous achievement of internal and external balance. Internal balance is defined as the level of economic activity that keeps the inflation rate constant. In Williamson's approach, the concept of external balance contains a normative element: the external position is balanced if the external current account (once adjusted for cyclical movements) can be regarded not only as sustainable (that is, meeting the country's intertemporal budget constraint), but also as "appropriate" (for example, based on desired levels of saving and investment). In order to determine the FEER, it is first necessary to formulate an econometric model for the trade sector that captures the relationships among output, current account, demand, and competitiveness. The FEER is then calculated as the exchange rate that maintains internal and external equilibrium. A critical summary of this approach by Black (1994) points out that serious questions remain concerning the normative choices on the model to be used, particularly the target for the current account.We have made it easy for you to find a PDF Ebooks without any digging. And by having access to our ebooks online or by storing it on your computer, you have convenient answers with Estimating the Equilibrium Real Exchange Rate - An Application to Finland. To get started finding Estimating the Equilibrium Real Exchange Rate - An Application to Finland, you are right to find our website which has a comprehensive collection of manuals listed.
Our library is the biggest of these that have literally hundreds of thousands of different products represented.

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Estimating the Equilibrium Real Exchange Rate - An Application to Finland

Estimating the Equilibrium Real Exchange Rate - An Application to Finland

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