This paper describes the methodology and the data used to compute nominal and real effective exchange rate indices in the International Monetary Fund’s Information Notice System (INS). In particular, it highlights improvements to the INS implemented over 1994-96, including modifications to the computational methodology, use of updated data, and extension of the INS to recent Fund members.
This paper describes the methodology and the data used to compute nominal and real effective exchange rate indices in the International Monetary Fund`s Information Notice System (INS). In particular, it highlights improvements to the INS implemented over 1994-96, including modifications to the computational methodology, use of updated data, and extension of the INS to recent Fund members.
This paper describes the methodology and the data used to compute nominal and real effective exchange rate indices in the International Monetary Fund's Information Notice System (INS). In particular, it highlights improvements to the INS implemented over 1994-96, including modifications to the computational methodology, use of updated data, and extension of the INS to recent Fund members.
This paper describes the methodology and the data used to compute nominal and real effective exchange rate indices in the International Monetary Fund’s Information Notice System (INS). In particular, it highlights improvements to the INS implemented over 1994-96, including modifications to the computational methodology, use of updated data, and extension of the INS to recent Fund members.
The International Financial Statistics Yearbook, usually published in September, contains available annual data covering 12 years for countries appearing in the monthly issues of IFS. The IFS service is the standard source of international financial statistics. Additional time series in country tables and some additional tables of area and world aggregates are included in the Yearbook.
This paper investigates the consequences of exchange rate volatility on the variability of export prices and quantities in the presence of market segmentation and pricing to market. Firms stabilize destination prices through systematic price discrimination, limiting the degree of exchange rate pass-through. Consequently, the variability of exchange rates is not fully translated into prices and quantities at the point of destination. Empirical estimates using aggregate price data for the G-7 industrial countries show incomplete pass-through in variances, with considerable variation among these countries. U.S. industry specific data also indicate incomplete pass-through in most cases, with considerable variation across industries.
We examine the role of cross-border input linkages in governing how international relative price changes influence demand for domestic value added. We define a novel value-added real effective exchange rate (REER), which aggregates bilateral value-added price changes, and link this REER to demand for value added. Input linkages enable countries to gain competitiveness following depreciations by supply chain partners, and hence counterbalance beggar-thy-neighbor effects. Cross-country differences in input linkages also imply that the elasticity of demand for value added is country specific. Using global input-output data, we demonstrate these conceptual insights are quantitatively important and compute historical value-added REERs.
The IMF's internal analysis of exchange rate issues has been guided by, and limited by, the conceptual and empirical frameworks that have emerged from the collective research of the economics profession. The research has provided several general approaches that are useful for assessing whether countries exchange rates seem broadly appropriate. One involves the calculation of purchasing power-party (PPP) measure or international competitiveness indicators. A second, known as the macroeconomic balance framework, focuses on the extent to which prevailing exchange rates and policies are consistent with simultaneous internal and external equilibrium over the medium run. Some recent extensions of the macroeconomic balance approach and the manner in which it is applied by the IMF staff are described in this paper.
Growth in sub-Saharan Africa has weakened after more than a decade of solid growth, although this overall outlook masks considerable variation across the region. Some countries have been negatively affected by falling prices of their main commodity exports. Oil-exporting countries, including Nigeria and Angola, have been hit hard by falling revenues and the resulting fiscal adjustments, while middle-income countries such as Ghana, South Africa, and Zambia are also facing unfavorable conditions. This October 2015 report discusses the fiscal and monetary policy adjustments necessary for these countries to adapt to the new environment. Chapter 2 looks at competitiveness in the region, analyzing the substantial trade integration that accompanied the recent period of high growth, and policy actions to nurture new sources of growth. Chapter 3 looks at the implications for the region of persistently high income and gender inequality and ways to reduce them.
With the global economy gaining some momentum, economies of Latin America and the Caribbean are recovering from a recession at the regional level in 2016. This gradual improvement can be understood as tale of two adjustments, external and fiscal, that are ongoing in response to earlier shocks. But headwinds from commodity terms-of-trade shocks and country-specific domestic factors are fading, paving the way for real GDP to grow by about 1 percent in 2017. Regional activity is expected to pick up further momentum in 2018, but at a slower pace than previously anticipated, while medium-term growth is projected to remain modest at about 2.6 percent. The outlook is shaped by key shifts in the global economic and policy landscape—where slow growth, low productivity, and high income inequality are creating pressure for a shift toward inward- looking policies in some advanced economies. Domestic fundamentals and developments, however, will continue to play a significant role in determining growth for the region. At the same time, risks to the outlook have widened in a setting of higher global uncertainty. In this challenging external context, countries should aim for completing fiscal and external adjustments to preserve or rebuild policy buffers. Charting a course toward higher, sustainable, and more equitable growth will also require strengthening structural reforms. Specifically, closing infrastructure gaps, improving the business environment, governance, and education outcomes, and encouraging female labor participation are necessary to boost medium-term growth and foster income convergence. Chapters in this report examine the ongoing external adjustment to terms-of-trade shifts, drivers of capital flows to the region, the role of the investor base, and macroeconomic impact of migration and remittances.
