Estimating Equilibrium Exchange Rates

Front Cover
Peterson Institute, 1994 - Business & Economics - 300 pages
The problems of exchange rate misalignments and the resulting payments imbalances have plagued the world economy for decades. At the Louvre Accord of 1987, the Group of Five industrial countries adopted a system of reference ranges for exchange rate management, influenced by proposals of C. Fred Bergstan and John Williamson for a target zone system. The reference range approach has, however, been operated only intermittently and half-heartedly, and questions continue to be raised in policy and scholarly circles about the design and operation of a full-fledged target zone regime. This volume, with chapters by leading international economists, explores one crucial issue in the design of a target zone system: the problem of calculating Williamson's concept of the fundamental equilibrium exchange rate (FEER). Williamson contributes an overview of the policy and analytic issues and a second chapter on his own calculations.
 

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Contents

Preface to the Paperback Edition
Acknowledgments xv
PART ONE
1
Imitations of the Tube 55
2
The Think Tanks Spread the Word 83
The Cult of Colorful Tidbits 95
The Party Is OverWhere Are the Readers? 3
3
The New Daily Newspaper Newsroom
7
Notes 199
9
The Marketers and Managers Move In
14
Selected Bibliography 237
3
Contents
vii
The Robustness of Equilibrium Exchange Rate
19
Real and Monetary Determinants of Real Exchange Rate
61
Estimating LongRun Equilibrium Real Exchange Rates
93
The Natural Real Exchange Rate of the US Dollar
133

ELEVEN
TWELVE
Fighting the Good Fight Within 161
2
The Future of the Word 173
6
Afterword 183
5
Estimates of FEERs
177
An Assessment of the Evidence on Purchasing
245
Index 243
293
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About the author (1994)

John Williamson, senior fellow (retired), was associated with the Institute from 1981 to 2012. He was project director for the UN High-Level Panel on Financing for Development (the Zedillo Report) in 2001; on leave as chief economist for South Asia at the World Bank during 1996-99; economics professor at Pontifica Universidade Católica do Rio de Janeiro (1978-81), University of Warwick (1970-77), Massachusetts Institute of Technology (1967, 1980), University of York (1963-68), and Princeton University (1962-63); adviser to the International Monetary Fund (1972-74); and economic consultant to the UK Treasury (1968-70).

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