Temporal Dimension and Equilibrium Exchange Rate: a FEER / BEER Comparison

Antonia Lòpez-Villavicencio (), Jacques Mazier and Jamel Saadaoui ()
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Antonia Lòpez-Villavicencio: CEPN - Centre d'Economie de l'Université Paris Nord - UP13 - Université Paris 13 - USPC - Université Sorbonne Paris Cité - CNRS - Centre National de la Recherche Scientifique
Jamel Saadaoui: CEPN - Centre d'Economie de l'Université Paris Nord - UP13 - Université Paris 13 - USPC - Université Sorbonne Paris Cité - CNRS - Centre National de la Recherche Scientifique
Authors registered in the RePEc Author Service: Antonia López Villavicencio

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Abstract: We analyze, in a unified theoretical framework, the two main models for equilibrium exchange rate, namely, the BEER and the FEER approaches. In order to understand the interactions between them, we study in detail the temporal links between these two measures. Our results show that, in average, the BEER and the FEER are closely related. Yet, important differences can be observed for some countries and/or some periods of time. Therefore, we analyze some of the factors that may explain this disconnection, identifying several aspects which are able to alter the relation between the current account and the real effective exchange rate, and so, between the FEER and the BEER. Our analysis puts forward the structural changes in matter of competitiveness, the dynamics of foreign asset positions and valuation effects as explanations for the divergence.

Keywords: Equilibrium Exchange Rate; BEER; FEER; Cointegration; Global Imbalances (search for similar items in EconPapers)
Date: 2012-03-01
New Economics Papers: this item is included in nep-cba
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00535907
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Citations: View citations in EconPapers (24)

Published in Emerging Markets Review, 2012, 13 (Issue 1), pp.58-77

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Related works:
Journal Article: Temporal dimension and equilibrium exchange rate: A FEER/BEER comparison (2012)
Working Paper: Temporal dimension and equilibrium exchange rate: A FEER/BEER comparison (2012)
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