Peterson Institute bookstore
The Peterson Institute for International Economics is a private, nonprofit, nonpartisan
research institution devoted to the study of international economic policy. More › ›
RSS News Feed Search

Real Exchange Rates for the Year 2000
Book Data
May 1998
ISBN paper 0-88132-253-9
188 pp.
$20.00 $10.00
( 50 % discount)

News Release



Real Exchange Rates for the Year 2000

Policy Analyses in International Economics 54

by Simon Wren-Lewis and
Rebecca Driver
with contributions from John Williamson and
Molly Mahar


Countries that entered the European Monetary Union had to do so at exchange rates that are close to equilibrium levels. So when are exchange rates at equilibrium levels? Real Exchange Rates for the Year 2000 discusses the fundamental equilibrium exchange rate (FEER) method and estimates FEERS for the G7 countries for 1995 and 2000. There have been large swings in all G7 currencies in the last five years, and in these circumstances, the markets and policymakers need better guides to the sustainable levels of these currencies.The authors estimate equilibrium real exchange rates using a partial-equilibrium model based on econometric trade equations, assumptions of trend output, and estimates of the medium-run current account. They emphasize that the FEER is a medium-run construct and contrast it with the purchasing price parity (PPP) method of determining rates. The authors discuss the links between the FEER and fiscal policy and the extent to which the FEER is a normative concept. They conclude with sensitivity analysis for changes in current account and trend GDP assumptions.

UK and European Residents: Purchase this book through Eurospan for faster service.


Search the full text
of this book:



1. What are Equilibrium Real Exchange Rates? 105.1KB

2. Why Calculate FEERS 79.1KB

3. How to Calculate FEERS 100.7KB

4. Estimating Trade Elasticities 157.6KB

5. FEER Estimates 121.5KB

Appendix A 238.4KB

Appendix B 97.7KB

Appendix C 190.4KB

Appendix D 84.9KB


Other books of interest:
Does Foreign Exchange Intervention Work?
Does Foreign Exchange Intervention Work?
by Kathryn M. Dominguez and
Jeffrey A. Frankel
Dollar Overvaluation and the World Economy
Dollar Overvaluation and the World Economy
edited by C. Fred Bergsten and
John Williamson
Estimating Equilibrium Exchange Rates
Estimating Equilibrium Exchange Rates
edited by John Williamson
Is the U.S. Trade Deficit Sustainable?
Is the U.S. Trade Deficit Sustainable?
by Catherine L. Mann