A Fair Exchange? : Theory and Practice of Calculating Equilibrium Exchange Rates /

We develop a theory-based model of equilibrium exchange rates incorporating factors that have been found to matter empirically. The model provides insights into how variables should be measured and what are appropriate cross-country restrictions. We estimate this model using a panel of 12 industrial...

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Bibliographic Details
Main Author: Lee, Jaewoo
Other Authors: Bayoumi, Tamim, Faruqee, Hamid
Format: Journal
Language:English
Published: Washington, D.C. : International Monetary Fund, 2005.
Series:IMF Working Papers; Working Paper ; No. 2005/229
Online Access:Full text available on IMF
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245 1 2 |a A Fair Exchange? :   |b Theory and Practice of Calculating Equilibrium Exchange Rates /  |c Jaewoo Lee, Hamid Faruqee, Tamim Bayoumi. 
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300 |a 1 online resource (28 pages) 
490 1 |a IMF Working Papers 
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500 |a <strong>On-Campus Access:</strong> No User ID or Password Required 
506 |a Electronic access restricted to authorized BRAC University faculty, staff and students 
520 3 |a We develop a theory-based model of equilibrium exchange rates incorporating factors that have been found to matter empirically. The model provides insights into how variables should be measured and what are appropriate cross-country restrictions. We estimate this model using a panel of 12 industrial countries. The model fits the data relatively well, implying relatively fast adjustment to equilibrium and outperforming a random walk at longer horizons. Furthermore, we find that the rate of adjustment depends on the distance from equilibrium, suggesting that part of the explanation for slow adjustment is inaccurate measures of equilibrium. 
538 |a Mode of access: Internet 
700 1 |a Bayoumi, Tamim. 
700 1 |a Faruqee, Hamid. 
830 0 |a IMF Working Papers; Working Paper ;  |v No. 2005/229 
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