The equilibrium exchange rates of the euro, the dollar and the yen

The purpose of this article is to estimate equilibrium exchange rates for the euro, the dollar and the yen. Theoretically speaking, our analysis is based on the "macroeconomic balance" approach developed by the IMF and the institute for International Economics. Empirically speaking, the equilibrium exchange rates are estimated using a comparative static approach based on the foreign trade equations in the Nigem multicountry model. The emphasis is on the analysis of the sensitivities of equilibrium exchange rates to deviations in the underlying current accounts from their targets.