Tracking the Euro

Vincent Koen (), Laurence Boone, Alain de Serres () and Nicola Fuchs

No 298, OECD Economics Department Working Papers from OECD Publishing

Abstract: During the first two years of monetary union, the euro's weakness surprised most market participants. Explanations proliferated ranging from fundamentals such as differences in growth prospects to psychological factors such as herd behaviour, but no single story fully accounts for the observed exchange rate path. Based on an eclectic approach, this paper offers an empirical analysis showing that terms-of-trade and saving/investment behaviour seem to have driven the euro exchange rate over the medium and longer run. While such econometric estimates ought to be interpreted with due care, they do support the view that towards the end of 2000, the euro was significantly undervalued ... Pendant les deux premières années de l'union monétaire, la faiblesse de l'euro a surpris la plupart des participants aux marchés. Les explications se sont multipliées allant de fondamentaux tels que les différentiels de croissance anticipés aux facteurs psychologiques tels que les comportements grégaires, mais aucune d'entre elles ne rend compte pleinement à elle seule de la trajectoire du taux de change. Partant d'une approche éclectique, ce papier propose une analyse empirique montrant que les termes de l'échange et les comportements d'épargne/investissement ont apparemment sous-tendu l'évolution du taux de change à moyen et plus long terme. Même si des estimations de ce type doivent être interprétées avec précaution, elles confortent le sentiment que vers la fin de l'année 2000 l'euro était significativement sousévalué ...

Keywords: BCE; capital flows; ECB; euro; Euro; eurosystem; Eurosystème; exchange rates; flux de capitaux; intervention; intervention; overshooting; surajustement; taux de change (search for similar items in EconPapers)
JEL-codes: E42 E44 E52 E58 E65 F31 F32 F47 (search for similar items in EconPapers)
Date: 2001-06-11
References: Add references at CitEc
Citations: View citations in EconPapers (19)

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Persistent link: https://EconPapers.repec.org/RePEc:oec:ecoaaa:298-en

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