Fundamental equilibrium exchange rates and exchange rate dynamics

Su Zhou

Open Economies Review, 1993, vol. 4, issue 2, 189-209

Abstract: This paper examines whether there is a tendency for actual exchange rates to return to their fundamental equilibrium exchange rates (FEERs) when the latter are estimated based on popular exchange rate models. Co-integration tests and unit root tests are applied. There is little evidence that the exchange rates of Japan and Germany have a reversion to the purchasing-power-parity (PPP) rates or Williamson's FEERs or the underlying external and internal balance (UEI) FEERs. Copyright Kluwer Academic Publishers 1993

Keywords: fundamental equilibrium exchange rates; cointegration; unit roots (search for similar items in EconPapers)
Date: 1993
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DOI: 10.1007/BF01000519

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