IDEAS home Printed from https://ideas.repec.org/a/cup/nierev/v141y1992ip62-70_5.html
   My bibliography  Save this article

Properties of the Fundamental Equilibrium Exchange Rate in Models of the UK Economy

Author

Listed:
  • Church, Keith B

Abstract

The Fundamental Equilibrium Exchange Rate (FEER) is that value of the real exchange rate that is consistent with macroeconomic equilibriumo This article uses the long-run trade equation elasticities from the models of Her Majesty's Treasury, the National Institute of Economic and Social Research and the Bank of England to examine the FEER calculation. The sensitivity of the results to changes in the key elasticities and to the possibility of a recent improvement in UK trading performance is considered. Historical comparisons are made between the FEER and the actual real exchange rate. All the results suggest that the real exchange rate was above the FEER at the time of ERM entry. The fixing of the nominal exchange rate removes a possible mechanism by which the economy might reach equilibrium and therefore convergence requires a period where UK inflation is lower than that of its trading partners.

Suggested Citation

  • Church, Keith B, 1992. "Properties of the Fundamental Equilibrium Exchange Rate in Models of the UK Economy," National Institute Economic Review, National Institute of Economic and Social Research, vol. 141, pages 62-70, August.
    • Handle: RePEc:cup:nierev:v:141:y:1992:i::p:62-70_5
    as

    Download full text from publisher

    File URL: https://www.cambridge.org/core/product/identifier/S0027950100029483/type/journal_article
    File Function: link to article abstract page
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hoej, Liselotte, 1995. "Fundamental equilibrium exchange rate: a case study of the Finnish Markka," Bank of Finland Research Discussion Papers 2/1995, Bank of Finland.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cup:nierev:v:141:y:1992:i::p:62-70_5. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Kirk Stebbing (email available below). General contact details of provider: https://edirc.repec.org/data/niesruk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.