Exchange Rate Assessment: Extension of the Macroeconomic Balance Approach

July 24, 1998

Preview Citation

Format: Chicago

Peter Isard, and Hamid Faruqee. Exchange Rate Assessment: Extension of the Macroeconomic Balance Approach, (USA: International Monetary Fund, 1998) accessed November 21, 2024

Summary

The IMF's internal analysis of exchange rate issues has been guided by, and limited by, the conceptual and empirical frameworks that have emerged from the collective research of the economics profession. The research has provided several general approaches that are useful for assessing whether countries exchange rates seem broadly appropriate. One involves the calculation of purchasing power-party (PPP) measure or international competitiveness indicators. A second, known as the macroeconomic balance framework, focuses on the extent to which prevailing exchange rates and policies are consistent with simultaneous internal and external equilibrium over the medium run. Some recent extensions of the macroeconomic balance approach and the manner in which it is applied by the IMF staff are described in this paper.

Subject: Balance of payments, Current account, Exchange rate adjustments, Exchange rates, Financial services, Foreign exchange, Real effective exchange rates, Real exchange rates, Real interest rates

Keywords: Current account, Current account model, Current account position, Equilibrium exchange rates, Europe, Exchange rate, Exchange rate adjustments, Exchange rates, Global, IMF surveillance, OP, Real exchange rates, Real interest rates, Saving-investment balance

Publication Details

Pages:

86
Volume:

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DOI:

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Issue:

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Series:

Occasional Paper No. 1998/012
Stock No:

S167EA0000000
ISBN:

9781557757319
ISSN:

0251-6365

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