IDEAS home Printed from https://ideas.repec.org/p/zbw/bofrdp/rdp1995_002.html
   My bibliography  Save this paper

Fundamental equilibrium exchange rate: a case study of the Finnish Markka

Author

Listed:
  • Hoej, Liselotte

Abstract

The purpose of this paper is to estimate the Fundamental Equilibrium Exchange Rate (FEER) for the Finnish economy and to derive a relationship between the current account and the real exchange rate in the macroeconomic equilibrium.FEER is defined as the real exchange rate which delivers a sustainable current account balance when the economy is growing at its equilibrium (non-inflationary) rate.The results emphasize the effects of the collapse of the Finnish-Soviet trade in 1991 on both the equilibrium rate of output and the equilibrium exchange rate.The assessment of the exchange rate situation prevailing in late 1994 points to the conclusion that there may be emerging conflicts in Finland between the targets of external and internal balance, unless structural reforms or the recovery of the international economy move the fundamentals from their present position.

Suggested Citation

  • 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.
    • Handle: RePEc:zbw:bofrdp:rdp1995_002
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/211715/1/bof-rdp1995-002.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. 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.
    2. Alogoskoufis, George, 1989. "On Fiscal Policies, External Imbalances and Fundamental Equilibrium Exchange Rates," CEPR Discussion Papers 322, C.E.P.R. Discussion Papers.
    3. Houthakker, Hendrik S & Magee, Stephen P, 1969. "Income and Price Elasticities in World Trade," The Review of Economics and Statistics, MIT Press, vol. 51(2), pages 111-125, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hoej, Liselotte, 1995. "Fundamental equilibrium exchange rate : a case study of the Finnish Markka," Research Discussion Papers 2/1995, Bank of Finland.
    2. repec:zbw:bofrdp:1995_002 is not listed on IDEAS
    3. Mohsen Bahmani-Oskooee & Taggert Brooks, 2003. "A new criteria for selecting the optimum lags in Johansen's cointegration technique," Applied Economics, Taylor & Francis Journals, vol. 35(8), pages 875-880.
    4. Kelvin Ho & Eric Wong & Edward Tan, 2016. "A New Approach to the Estimation of Equilibrium Real Exchange Rates among East-Asian Economies," Working Papers 132016, Hong Kong Institute for Monetary Research.
    5. Robert A. Blecker, 2009. "Long-Run Growth in Open Economies: Export-Led Cumulative Causation or a Balance-of-Payments Constraint?," Working Papers 2009-23, American University, Department of Economics.
    6. Martin Gürtler, 2019. "Dynamic analysis of trade balance behavior in a small open economy: the J-curve phenomenon and the Czech economy," Empirical Economics, Springer, vol. 56(2), pages 469-497, February.
    7. Vahagn Galstyan & Philip R. Lane, 2008. "External Imbalances and the Extensive Margin of Trade," Economic Notes, Banca Monte dei Paschi di Siena SpA, vol. 37(3), pages 241-257, November.
    8. Mohsen Bahmani-Oskooee & Amr Hosny, 2015. "Commodity trade between EU and Egypt and Orcutt’s hypothesis," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 42(1), pages 1-24, February.
    9. Mayer, Thierry & Steingress, Walter, 2020. "Estimating the effect of exchange rate changes on total exports," Journal of International Money and Finance, Elsevier, vol. 106(C).
    10. Mohsen Bahmani‐Oskooee & Hanafiah Harvey, 2012. "How responsive are Indonesia's bilateral inpayments and outpayments to real depreciation of Rupiah?," Studies in Economics and Finance, Emerald Group Publishing Limited, vol. 29(2), pages 133-143, June.
    11. Kirkland, Jack J. & O'Rourke, A. Desmond, 1982. "Predicting The Potential For Agricultural Imports Of The Middle East In 1990," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 7(1), pages 1-12, July.
    12. Mohsen Bahmani-Oskooee & Rajarshi Mitra, 2010. "How sensitive is commodity trade flows between US and India to currency depreciation?," Applied Economics, Taylor & Francis Journals, vol. 42(3), pages 267-277.
    13. Q. Farooq Akram, 2004. "Oil wealth and real exchange rates: The FEER for Norway," Working Paper 2004/16, Norges Bank.
    14. Kichun Kang, 2008. "The Sustainability of Korea's Trade Balances with China and Japan: Perspective from the Asymmetry in Income Elasticities," Korean Economic Review, Korean Economic Association, vol. 24, pages 173-197.
    15. Amjad Ali & Muhammad Irfan Chani, 2013. "Disaggregated Import Demand Function: A Case Study of Pakistan," International Journal of Economics and Empirical Research (IJEER), The Economics and Social Development Organization (TESDO), vol. 1(1), pages 1-14, January.
    16. Stéphane Capet & Philippe Gudin de Vallerin, 1993. "Fonctions d'importations et d'exportations : l'apport de la théorie économétrique récente," Économie et Prévision, Programme National Persée, vol. 107(1), pages 15-36.
    17. Wenting Wang & Longbao Wei, 2021. "Impacts of agricultural price support policy on price variability and welfare: Evidence from China's soybean market," Agricultural Economics, International Association of Agricultural Economists, vol. 52(1), pages 3-17, January.
    18. Bajo-Rubio, Oscar & Berke, Burcu & Esteve, Vicente, 2016. "The effects of competitiveness on trade balance: The case of Southern Europe," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 10, pages 1-27.
    19. Borin, Alessandro & Di Nino, Virginia & Mancini, Michele & Sbracia, Massimo, 2016. "The Cyclicality of the Income Elasticity of Trade," MPRA Paper 73000, University Library of Munich, Germany.
    20. Lücke Dorothea & Schröder Philipp J.Η. & Schumacher Dieter, 2005. "A Note on R&D and Price Elasticity of Demand," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 225(6), pages 688-698, December.
    21. Tremblay, R., 1990. "The Principles of Export-Led Growth," Cahiers de recherche 9020, Universite de Montreal, Departement de sciences economiques.

    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:zbw:bofrdp:rdp1995_002. 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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/bofgvfi.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.