IDEAS home Printed from https://ideas.repec.org/p/iie/pbrief/pb12-23.html
   My bibliography  Save this paper

Updated Estimates of Fundamental Equilibrium Exchange Rates

Author

Listed:
  • William R. Cline

    () (Peterson Institute for International Economics)

  • John Williamson

    () (Peterson Institute for International Economics)

Abstract

In this semiannual update of their estimates of fundamental equilibrium exchange rates (FEERs), William R. Cline and John Williamson again find that the overvaluation of the dollar and undervaluation of the Chinese renminbi have become much more modest than in previous years, as their current account imbalances have narrowed. Seriously undervalued currencies now include those of Singapore, Taiwan, Hong Kong, and Malaysia, as well as the Swiss franc and Swedish krona. Serious overvaluation persists for Turkey, New Zealand, Australia, and (though less so than before) South Africa. The authors welcome the new External Sector Report of the International Monetary Fund, which generally finds the same directions of misalignment across currencies, with the notable exception of Switzerland. However, they criticize the Fund's methodology for conflating positive (observed pattern) and normative (systemically salutary) behavior, in particular by awarding high acceptable current account surplus targets, particularly to Singapore and Switzerland, because of financial center status and past accumulation of massive external assets.

Suggested Citation

  • William R. Cline & John Williamson, 2012. "Updated Estimates of Fundamental Equilibrium Exchange Rates," Policy Briefs PB12-23, Peterson Institute for International Economics.
  • Handle: RePEc:iie:pbrief:pb12-23
    as

    Download full text from publisher

    File URL: https://piie.com/publications/policy-briefs/updated-estimates-fundamental-equilibrium-exchange-rates
    Download Restriction: no

    References listed on IDEAS

    as
    1. Joseph E. Gagnon, 2012. "Combating Widespread Currency Manipulation," Policy Briefs PB12-19, Peterson Institute for International Economics.
    2. William R. Cline, 2008. "Estimating Consistent Fundamental Equilibrium Exchange Rates," Working Paper Series WP08-6, Peterson Institute for International Economics.
    3. William R. Cline & John Williamson, 2012. "Estimates of Fundamental Equilibrium Exchange Rates, May 2012," Policy Briefs PB12-14, Peterson Institute for International Economics.
    4. William R. Cline & John Williamson, 2008. "New Estimates of Fundamental Equilibrium Exchange Rates," Policy Briefs PB08-7, Peterson Institute for International Economics.
    5. William R. Cline, 2005. "United States as a Debtor Nation, The," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 3993.
    6. C. Fred Bergsten & C. Randall Henning (ed.), 2012. "Global Economics in Extraordinary Times: Essays in Honor of John Williamson," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 6628.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Luo, Ji & Williams, Gary W., 2015. "The Impacts of Chinese Exchange Rate Policy on World Soybean and Products Markets," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205075, Agricultural and Applied Economics Association;Western Agricultural Economics Association.
    2. Saadaoui, Jamel, 2015. "Global imbalances: Should we use fundamental equilibrium exchange rates?," Economic Modelling, Elsevier, vol. 47(C), pages 383-398.
    3. Jan Priewe, 2016. "The enigmatic dollar-euro exchange rate and the world's biggest forex market - performance, causes, consequences," IMK Studies 49-2016, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
    4. Ronald Ian McKinnon & Gunther Schnabl, 2014. "China's Exchange Rate and Financial Repression: The Conflicted Emergence of the Renminbi as an International Currency," CESifo Working Paper Series 4649, CESifo Group Munich.
    5. Duwicquet, Vincent & Mazier, Jacques & Petit, Pascal & Saadaoui, Jamel, 2015. "The future of the euro," MPRA Paper 67690, University Library of Munich, Germany.
    6. repec:cii:cepiei:2014-q3-139-1 is not listed on IDEAS
    7. Pablo Duarte & Gunther Schnabl, 2015. "Macroeconomic Policy Making, Exchange Rate Adjustment and Current Account Imbalances in Emerging Markets," Review of Development Economics, Wiley Blackwell, vol. 19(3), pages 531-544, August.
    8. Issiaka Coulibaly, 2014. "Competitiveness and growth within the CFA franc zone: Does the switch to the Euro matter?," International Economics, CEPII research center, issue 139, pages 1-18.
    9. Wen Si, 2015. "The Effects of Foreign Currency Derivatives on the Monetary Policy Exchange Rate Channel in China," International Economic Journal, Taylor & Francis Journals, vol. 29(2), pages 175-193, June.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iie:pbrief:pb12-23. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Peterson Institute webmaster). General contact details of provider: http://edirc.repec.org/data/iieeeus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.