William Cline, John Williamson, 07 August 2008

Has the dollar fallen far enough? How large are unsustainable international imbalances? This column presents new estimates of fundamental equilibrium exchange rates, concluding that the US dollar has fallen enough with respect to the euro and pound but is overvalued against Asian currencies.

Jeffrey Frankel, 09 July 2008

The Gulf States’ dollar peg is causing them harm. One of the world’s leading international macroeconomists argues that they should “peg the export price” as this delivers automatic accommodation to terms of trade shocks while retaining the credibility-enhancing advantages of a nominal anchor.

Richard Baldwin, 20 November 2007

In a May 2007 essay, Martin Feldstein argued that a drop in US mortgage refinancing would raise US personal saving and this would necessitate a fall in the dollar. That’s looking pretty good at the moment. Here his basic logic is explained.

Giancarlo Corsetti, 06 November 2007

Classic analysis by Obstfeld and Rogoff says that the dollar still has a long way to fall. Some new theory and recent simulations suggests that US trade response may be bigger than expected and so the dollar may have fallen enough.

Shang-Jin Wei, 29 October 2007

Those urging China to adopt a more flexible exchange-rate regime sell the policy advice on the ground that it will substantially speed up the adjustment of global current accounts and that it will also substantially enhance the effectiveness of China’s domestic macroeconomic policies. Both supposed benefits may be exaggerated.

Philip Lane, Jay Shambaugh, 24 October 2007

Foreign exchange is used for cross-border trade in goods and assets, so two weighted exchange rates affect the international adjustment process: the financially-weighted exchange rate index operates via the valuation channel, and trade-weighted index via net exports. The importance of the valuation channel is secularly increasing, in line with the rapid growth in the gross levels of foreign assets and liabilities.

Richard Baldwin, 02 October 2007

As the dollar has started to slide, the question is: how far, how fast? This column, which is based on Paul Krugman’s recent Economic Policy article suggests the answers are: pretty far and pretty fast.

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