This policy brief updates Cline and Williamson's estimates of fundamental equilibrium exchange rates (FEERs) to April 2011. Most currencies appear to have been reasonably close to their FEERs in April 2011. The most important exceptions are China, on the weak side, and the United States, on the...

The government of Egypt recently stated that external financial assistance is necessary in the present economic situation and has expressed a strong preference for receiving it in part via debt relief. Williamson and Khan explore whether there is a case for debt relief and if so what form this...

The currency markets have been extremely disturbed for the last three months. The period witnessed a major strengthening of the US dollar in September, then the European currency crisis, a recovery of the euro when the markets believed that the crisis was being controlled, and then a rebound of...

Cline and Williamson calculate a new set of fundamental equilibrium exchange rates (FEERs) based on the new round of International Monetary Fund (IMF) projections in the spring 2012 World Economic Outlook. These show that on a trade-weighted basis the US dollar is now overvalued by 3–4...

The paper summarizes the current theory of how a floating exchange rate is determined, dividing the subject into what determines the steady state and what determines the transition to steady state. The inadequacies of this model are examined, and an alternative “behavioral” model, which...

Most countries emerged from the Second World War with capital accounts that were closed to the rest of the world. Since then, a process of capital account opening has occurred, with the result that all developed and many emerging-market countries now have capital accounts that are both de facto...

The macroeconomic regime implanted in Brazil during the second administration of Fernando Henrique Cardoso, and largely maintained by his successor, is typical of those of the advanced countries. The anchor is provided by an inflation-targeting regime (with a target inflation rate somewhat...

It has been 80 years since John Maynard Keynes first proposed a plan that would have disciplined persistent surplus countries. But the Keynes Plan, like the subsequent Volcker Plan in 1972-74, was defeated by the major surplus country of the day (the United States and Germany, respectively), and...

Cline and Williamson update their estimates of fundamental equilibrium exchange rates (FEERs) for leading advanced and emerging-market economies. This policy brief is a sequel to Policy Brief 08-7, published last July, and is based on the latest developments in the world economy. The authors,...

In this update of estimates of fundamental equilibrium exchange rates (FEERs) for 30 major economies, Cline and Williamson report on changes in disequilibria in exchange markets since March 2009, the date to which their earlier (June 2009) calculations referred. The overvaluation of the dollar...