A1 - Agnès Bénassy-Quéré
A1 - Sophie Béreau
A1 - Valérie Mignon
TI - Equilibrium Exchange Rates: a Guidebook for the Euro-Dollar Rate
IS - 2008-02
T3 - Working Papers
KW - Equilibrium exchange rate
KW - Euro-dollar
KW - Global imbalances
N2 - In this paper, we investigate different views of equilibrium exchange rates within a single, stock-flow adjustment framework. We then compare FEER and BEER estimations of equilibrium exchange rates based on the same, econometric model of the net foreign asset position, with special focus on the euro-dollar rate. These estimations suggest that, although more robust to alternative assumptions, the BEER approach may rely on excessive confidence on past behaviors in terms of portfolio allocation. Symmetrically, FEERs may underestimate the plasticity of international capital markets because they focus on the adjustment of the trade balance.
ER -