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How Robust are FEERs?

Author

Listed:
  • Driver, Rebecca
  • Wren-Lewis, Simon

Abstract

Fundamental Equilibrium Exchange Rates, or FEERs, are defined as the real exchange rate which would prevail if the economy were to be in internal and external equilibrium. As such they have been widely used both for policy purposes and as a method of calculating the level to which the real exchange rate might tend in the medium run. This paper addresses the issue of the sensitivity of FEERs to changes in the assumptions underlying these calculations. We quantify the sensitivity of the FEER calculations to various parameters and inputs, and show that in many cases the changes induced in the FEER are large.

Suggested Citation

  • Driver, Rebecca & Wren-Lewis, Simon, 1996. "How Robust are FEERs?," Discussion Papers 9606, Exeter University, Department of Economics.
  • Handle: RePEc:exe:wpaper:9606
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    Cited by:

    1. Chinn, Menzie D., 2000. "Before the fall: were East Asian currencies overvalued?," Emerging Markets Review, Elsevier, vol. 1(2), pages 101-126, September.
    2. A.J. Hallet, 1998. "When Do Target Zones Work? An Examination of Exchange Rate Targeting as a Device for Coordinating Economic Policies," Open Economies Review, Springer, vol. 9(2), pages 115-138, April.

    More about this item

    Keywords

    Fundamental Equilibrium Exchange Rates;

    JEL classification:

    • F00 - International Economics - - General - - - General

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