The exchange rate cannot significantly diverge from a (real) long-term equilibrium level consistent with the macroeconomic picture of an economy for a long period of time; otherwise, the economy suffers from macroeconomic imbalances such as below-potential growth and below natural employment, or...

This paper shows a new macro-econometric approach to the NATREX model of the equilibrium real exchange rate. Many of the models in the literature are based upon anticipations, monetary policy, and speculative capital movements. The NATREX model denotes what are the fundamental determinants of...