(OFF TOPIC) GHOST OF 87 --- Currency & Market Timing
"One of its major contributions has been the development of the concept of fundamental equilibrium exchange rates (FEERs), initially by John Williamson in The Exchange Rate System (1983). We and others have refined the concept over the years, most recently in Williamson's edited volume Estimating Equilibrium Exchange Rates (1994), and have attempted to estimate FEERs for individual countries. We have used the idea of FEERs as the analytical cornerstone of our policy proposals for currency target zones, as elaborated most recently in my Global Economic Leadership and the Group of Seven (1996, with C. Randall Henning). However, as noted in the present volume, FEERs have broader uses that are important whether or not one believes in applying them to target zones.
The main purpose of the current study is to update the calculation of FEERs. Williamson's latest estimates, in the 1994 volume cited above, were for 1990. In this analysis, Simon Wren-Lewis and Rebecca Driver bring the estimates forward to 1995, when they found market rates to track the FEERs fairly well, and then project them to 2000 with results suggesting that a SUBSTANTIAL DOLLAR DEPRECIATION, implying appreciation of the yen and euro, LIES AHEAD...."
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These guys advise the G7(8). So we now have a heavy hitter in the economic research field saying basically that the $$$ is overvalued.
The only question now is whether accumulating GOLD is the best hedge against $$$ depreciation. |
