Exchange rates and global rebalancing

Barry Eichengreen and Gisela Rua

This paper considers the general equilibrium relationship between exchange rates and global imbalances. It emphasizes that the exchange rate is not a primitive but an equilibrium price determined by the policy mix. It uses extensions of the two-country Obstfeld-Rogoff model to analyze the response of imbalances and real exchange rates to shocks. Finally, it analyzes the characteristics of episodes in which chronic current account surpluses (as opposed to deficits) come to an end.

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Year of publication:	2011
Authors:	Eichengreen, Barry ; Rua, Gisela
Publisher:	Tokyo : Asian Development Bank Inst.
Subject:	Obstfeld-Rogoff model \| Außenwirtschaftliches Gleichgewicht \| External balance \| Leistungsbilanz \| Current account \| Internationaler Finanzmarkt \| International financial market \| Wechselkurs \| Exchange rate \| Allgemeines Gleichgewicht \| General equilibrium \| Zwei-Länder-Modell \| Two-country model \| Schätzung \| Estimation \| Welt \| World \| 1980-2008