## Methodology for Current Account and Exchange Rate Assessments

_Occasional Papers, December 28, 2001_

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**Canonical URL:** [Methodology for Current Account and Exchange Rate Assessments](https://www.imf.org/en/publications/occasional-papers/issues/2016/12/30/methodology-for-current-account-and-exchange-rate-assessments-15360)

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## Bibliographic details
- Authors: G. Russell Kincaid, Martin Fetherston, Peter Isard, Hamid Faruqee
- Published: December 28, 2001
- Series: Occasional Papers
- DOI: https://doi.org/10.5089/9781589060814.084

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### CGER purpose and motivation
- Primary motivation: identify cases where exchange rates appear to be substantially out of line with medium-run macroeconomic fundamentals.
- Recognizes that such situations can have different interpretations depending on the cyclical positions of economies and other circumstances.
- Work reported is that of the Coordinating Group on Exchange Rate Issues (CGER).

### Macroeconomic balance framework
- Assessments of exchange rates among industrial country currencies rely primarily on an application of a macroeconomic balance framework.
- Framework focus: the extent to which the current account positions associated with prevailing exchange rates are consistent with medium-run fundamentals.
- Emphasis on real exchange rates and the saving-investment balance as central determinants in the assessment.

### Implications for IMF surveillance
- Substantial discrepancies between exchange rates and their medium-run equilibrium levels, when they emerge, raise two different, however related issues for the IMF to address in its exercise of bilateral and multilateral Surveillance.
- These assessments inform IMF engagement in both bilateral and multilateral contexts.

### Core analytical considerations
- Cyclical positions of economies are explicitly recognized as affecting interpretation of exchange rate assessments.
- The methodology provides perspectives on alternative frameworks for assessing exchange rates and the rationale for CGER's general approach.

*International Monetary Fund*

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_Source: https://www.imf.org/en/publications/occasional-papers/issues/2016/12/30/methodology-for-current-account-and-exchange-rate-assessments-15360_