{
  "title": "Misalignment and Managed Exchange Rates: An Application to the Thai Baht",
  "publication": "IMF Working Papers, March 1, 2000",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2016/12/30/misalignment-and-managed-exchange-rates-an-application-to-the-thai-baht-3514",
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  "summary": "This paper proposes a methodology for analyzing dynamic misalignment in managed exchange rate systems that combines the estimation approach to modeling the real exchange rate with the calibration approach to generating the equilibrium real exchange rate.",
  "sections": [
    {
      "heading": "Methodology",
      "content": "- Proposes a methodology for analyzing dynamic misalignment in managed exchange rate systems that combines:\n  - the estimation approach to modeling the real exchange rate, and\n  - the calibration approach to generating the equilibrium real exchange rate.\n- Model estimation in the application is conducted using only pre-July 1997 data.\n- The analysis focuses on the difference between the evolution of the actual real exchange rate and the generated equilibrium rate, defined as the \"misalignment gap.\""
    },
    {
      "heading": "Application to the Thai baht",
      "content": "- The methodology is applied to the Thai baht.\n- The model is estimated using only pre-July 1997 data to assess market expectations reflected in the exchange rate."
    },
    {
      "heading": "Key findings and interpretation",
      "content": "- The misalignment gap (actual real exchange rate minus generated equilibrium rate) reveals the extent to which the market was persistently factoring in an expected depreciation of the Thai baht.\n- The paper emphasizes dynamic analysis of misalignment in a managed exchange rate system context."
    },
    {
      "heading": "Subjects and keywords",
      "content": "- Subjects:\n  - Exchange rate arrangements\n  - Exchange rates\n  - Financial services\n  - Foreign exchange\n  - Interest rate parity\n  - Managed exchange rates\n  - Real exchange rates\n- Keywords:\n  - error-correction speed\n  - Exchange rate arrangements\n  - Exchange rates\n  - expectation error\n  - integration estimator\n  - interest differential\n  - Interest rate parity\n  - Managed Equilibrium exchange rate\n  - managed exchange rate system\n  - Managed exchange rates\n  - managed rate\n  - misalignment\n  - policy-managed exchange rate\n  - Real exchange rate\n  - Real exchange rates\n  - simulations\n  - single-equation approach\n  - spot rate\n  - system vector error correction result\n  - Thai baht exchange rate\n  - time-series analysis\n  - trade equation approach\n  - WP\n\n---\n\n Content in this bundle\n\n- Misalignment and Managed Exchange Rates:  An Application to the Thai Baht - WP/00/63\n  - Misalignment and Managed Exchange Rates:  An Application to the Thai Baht - WP/00/63 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Misalignment and Managed Exchange Rates:  An Application to the Thai Baht - WP/00/63 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/30/misalignment-and-managed-exchange-rates-an-application-to-the-thai-baht-3514"
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    "Authors: G. C. Lim",
    "Published: March 1, 2000",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781451848410.001",
    "Proposes a methodology for analyzing dynamic misalignment in managed exchange rate systems that combines:",
    "Model estimation in the application is conducted using only pre-July 1997 data.",
    "The analysis focuses on the difference between the evolution of the actual real exchange rate and the generated equilibrium rate, defined as the \"misalignment gap.\"",
    "The methodology is applied to the Thai baht.",
    "The model is estimated using only pre-July 1997 data to assess market expectations reflected in the exchange rate.",
    "The misalignment gap (actual real exchange rate minus generated equilibrium rate) reveals the extent to which the market was persistently factoring in an expected depreciation of the Thai baht.",
    "The paper emphasizes dynamic analysis of misalignment in a managed exchange rate system context.",
    "Subjects:",
    "Keywords:",
    "**Misalignment and Managed Exchange Rates:  An Application to the Thai Baht - WP/00/63**"
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