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2022 Update of the External Balance Assessment Methodology

Cian Allen, Camila Casas, Giovanni Ganelli, Luciana Juvenal, Daniel Leigh, Pau Rabanal, Cyril Rebillard, Jair Rodriguez and Joao Jalles

No 2023/047, IMF Working Papers from International Monetary Fund

Abstract: The assessment of external positions and exchange rates of member countries is a key mandate of the IMF. The External Balance Assessment (EBA) methodology has provided the framework for conducting external sector assessments by Fund staff since its introduction in 2012. This paper provides the latest version of the EBA methodology, updated in 2022 with additional refinements to the current account and real exchange rate regression models, as well as updated estimates for other components of the EBA methodology. The paper also includes an assessment of how estimated current account gaps based on EBA are associated with future external adjustment.

Keywords: Current accounts; exchange rates; external sustainability; external sector assessments; global imbalances; OECD product market; EBA gaps adjustment; EBA current account model; EBA REER; labor market rigidity; External balance assessment (EBA); Real effective exchange rates; Current account; Current account balance; Real exchange rates; Global (search for similar items in EconPapers)
Pages: 68
Date: 2023-03-03
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Handle: RePEc:imf:imfwpa:2023/047