Equilibrium Exchange Rates

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Ronald MacDonald, Jerome L. Stein
Springer Science & Business Media, Jul 31, 1999 - Business & Economics - 351 pages
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  • How successful is PPP, and its extension in the monetary model, as a measure of the equilibrium exchange rate?
  • What are the determinants and dynamics of equilibrium real exchange rates?
  • How can misalignments be measured, and what are their causes?
  • What are the effects of specific policies upon the equilibrium exchange rate?

The answers to these questions are important to academic theorists, policymakers, international bankers and investment fund managers. This volume encompasses all of the competing views of equilibrium exchange rate determination, from PPP, through other reduced form models, to the macroeconomic balance approach.
This volume is essentially empirical: what do we know about exchange rates? The different econometric and theoretical approaches taken by the various authors in this volume lead to mutually consistent conclusions. This consistency gives us confidence that significant progress has been made in understanding what are the fundamental determinants of exchange rates and what are the forces operating to bring them back in line with the fundamentals.
 

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Contents

Introduction Equilibrium Exchange Rates
1
What Do We Really Know about Real Exchange Rates?
19
The Evolution of the Real Value of the US Dollar Relative to the G7 Currencies
67
A Macroeconomic Balance Framework for Estimating Equilibrium Exchange Rates
103
Feers A Sensitivity Analysis
135
Productivity Government Spending and the Real Exchange Rate Evidence for OECD Countries
163
Fundamentals of the Real DollarPound Rate 18711994
191
Nominal Equilibrium Exchange Rate Models A Panel Perspective
209
What Determines Real Exchange Rates The Long and Short of It
241
Exchange Rates and Economic Fundamentals A Methodological Comparison of Beers and Feers
285
Japanese Effective Exchange Rates and Determinants A LongRun Perspective
323
Index
349
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