Fundamental Equilibrium Exchange Rates for the G7.

Working paper

The Fundamental Equilibrium Exchange Rate (FEER) is the real exchange rate which produces a current account that is exactly matched by equilibrium medium-term capital flows. This paper sets out a small model to calculate FEERs for the G7 from 1971 to 1988. This model's parameters are either directly estimated or derived from the long-run properties of a larger world econometric model, GEM. Particular attention is paid to feedbacks from the FEER to the NAIRU, and interactions between world output, trade and commodity prices.

Authors: Barrell, R; Wren-Lewis, S

• Publisher: CEPR
• Host title: C.E.P.R.Discussion Papers
• Volume: 323
• Series: C.E.P.R.Discussion Papers
• Publication date: 1989-01-01
• Paper number: 323
• Language: English