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N° 2008-02 |
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| March 2008 |
| Equilibrium Exchange Rates: a Guidebook for the Euro-Dollar Rate |
Agnès Bénassy-Quéré
Sophie Béreau
Valérie Mignon |
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| 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. |
Non-technical summary  |
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Résumé
non-technique
en français |
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| Full text |
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| Equilibrium exchange rates; euro-dollar; FEER; BEER; global imbalances |
Keywords |
| F31; C23 |
JEL classification |
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