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Exchange Rate Misalignments at World and European Levels: a FEER Approach

Author

Listed:
  • Se-Eun Jeong
  • Jacques Mazier
  • Jamel Saadaoui

Abstract

Since the mid-1990s, we observe an increase of world current account imbalances. These imbalances have only been partially reduced since the burst of the crisis in 2007. They reflect, to some extent, exchange rate misalignments, an issue which has been frequently studied in the literature. However, these imbalances, which have reinforced in the 2000s, are also important inside the Euro area. This analysis cannot be reduced to simple estimates of euro misalignment at the world level because of specific constraints that exist for each member of the Euro area. This article aims to examine to what extent intra-European imbalances reflect exchange rate misalignments for each “national euro”.

Suggested Citation

  • Se-Eun Jeong & Jacques Mazier & Jamel Saadaoui, 2010. "Exchange Rate Misalignments at World and European Levels: a FEER Approach," International Economics, CEPII research center, issue 121, pages 25-58.
  • Handle: RePEc:cii:cepiie:2010-q1-121-2
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    Cited by:

    1. Vincent Duwicquet & Jacques Mazier & Jamel Saadaoui, 2014. "Interest rates, eurobonds and intra-European exchange rate misalignments: the challenge of sustainable adjustments in the eurozone," Working Papers halshs-01089208, HAL.
    2. Gnimassoun, Blaise & Mignon, Valérie, 2016. "How Do Macroeconomic Imbalances Interact? Evidence From A Panel Var Analysis," Macroeconomic Dynamics, Cambridge University Press, vol. 20(7), pages 1717-1741, October.
    3. Jamel Saadaoui, 2016. "Post-Brexit FEER," Working Papers of BETA 2016-51, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    4. Makram El-Shagi & Axel Lindner & Gregor von Schweinitz, 2016. "Real Effective Exchange Rate Misalignment in the Euro Area: A Counterfactual Analysis," Review of International Economics, Wiley Blackwell, vol. 24(1), pages 37-66, February.
    5. Mpho Bosupeng, 2018. "Leading Indicators and Financial Crisis: A Multi-Sectoral Approach Using Signal Extraction," Journal of Empirical Studies, Conscientia Beam, vol. 5(1), pages 20-44.
    6. Comunale, Mariarosaria, 2015. "Current account and REER misalignments in Central Eastern EU countries: an update using the macroeconomic balance approach," BOFIT Discussion Papers 28/2015, Bank of Finland, Institute for Economies in Transition.
    7. Saadaoui, Jamel, 2012. "Déséquilibres globaux, taux de change d’équilibre et modélisation stock-flux cohérente [Global Imbalances, Equilibrium Exchange Rates and Stock-Flow Consistent Modelling]," MPRA Paper 51332, University Library of Munich, Germany.
    8. Cécile Couharde & Serge Rey & Audrey Sallenave, 2016. "External debt and real exchange rates’ adjustment in the euro area: new evidence from a nonlinear NATREX model," Applied Economics, Taylor & Francis Journals, vol. 48(11), pages 966-986, March.
    9. Comunale, Mariarosaria, 2018. "Current account and real effective exchange rate misalignments in Central Eastern EU countries: An update using the macroeconomic balance approach," Economic Systems, Elsevier, vol. 42(3), pages 414-436.
    10. repec:bof:bofitp:urn:nbn:fi:bof-201510131420 is not listed on IDEAS
    11. Jamel Saadaoui, 2018. "Internal Devaluations and Equilibrium Exchange Rates: new evidences and perspectives for the EMU," Applied Economics, Taylor & Francis Journals, vol. 50(59), pages 6364-6381, December.
    12. Works, Richard Floyd, 2016. "Econometric modeling of exchange rate determinants by market classification: An empirical analysis of Japan and South Korea using the sticky-price monetary theory," MPRA Paper 76382, University Library of Munich, Germany.
    13. Morvillier, Florian, 2020. "Do currency undervaluations affect the impact of inflation on growth?," Economic Modelling, Elsevier, vol. 84(C), pages 275-292.
    14. Duwicquet, Vincent & Mazier, Jacques & Petit, Pascal & Saadaoui, Jamel, 2015. "The future of the euro," MPRA Paper 67690, University Library of Munich, Germany.
    15. Bagnai, Alberto & Granville, Brigitte & Mongeau Ospina, Christian A., 2017. "Withdrawal of Italy from the euro area: Stochastic simulations of a structural macroeconometric model," Economic Modelling, Elsevier, vol. 64(C), pages 524-538.
    16. Mpho Bosupeng & Janet Dzator & Andrew Nadolny, 2019. "Exchange Rate Misalignment and Capital Flight from Botswana: A Cointegration Approach with Risk Thresholds," JRFM, MDPI, vol. 12(2), pages 1-26, June.
    17. Vincent Duwicquet & Jacques Mazier & Jamel Saadaoui, 2016. "Interest rates, Eurobonds and intra-European exchange rate misalignments," Post-Print hal-01359820, HAL.
    18. Jhon Edwar Torres & Juan Pablo Cote, 2017. "Un nuevo cálculo de la tasa de cambio real de equilibrio para Colombia: Enfoque de Balance Macroeconómico," Borradores de Economia 1030, Banco de la Republica de Colombia.

    More about this item

    Keywords

    Equilibrium Exchange Rate; Current Account Balance; Macroeconomic Balance;
    All these keywords.

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements

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