## Misalignment and Managed Exchange Rates: An Application to the Thai Baht

_IMF Working Papers, March 1, 2000_

## Source details

**Canonical URL:** [Misalignment and Managed Exchange Rates: An Application to the Thai Baht](https://www.imf.org/en/publications/wp/issues/2016/12/30/misalignment-and-managed-exchange-rates-an-application-to-the-thai-baht-3514)

## Other formats

- [Markdown version](/en/publications/wp/issues/2016/12/30/misalignment-and-managed-exchange-rates-an-application-to-the-thai-baht-3514/index.md)
- [Structured JSON version](/en/publications/wp/issues/2016/12/30/misalignment-and-managed-exchange-rates-an-application-to-the-thai-baht-3514/index.json)
- [Bundle manifest](/en/publications/wp/issues/2016/12/30/misalignment-and-managed-exchange-rates-an-application-to-the-thai-baht-3514/bundle-manifest.json)

## Bibliographic details
- Authors: G. C. Lim
- Published: March 1, 2000
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451848410.001

---

### Methodology
- Proposes a methodology for analyzing dynamic misalignment in managed exchange rate systems that combines:
  - the estimation approach to modeling the real exchange rate, and
  - the calibration approach to generating the equilibrium real exchange rate.
- 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."

### Application to the Thai baht
- 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.

### Key findings and interpretation
- 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 and keywords
- Subjects:
  - Exchange rate arrangements
  - Exchange rates
  - Financial services
  - Foreign exchange
  - Interest rate parity
  - Managed exchange rates
  - Real exchange rates
- Keywords:
  - error-correction speed
  - Exchange rate arrangements
  - Exchange rates
  - expectation error
  - integration estimator
  - interest differential
  - Interest rate parity
  - Managed Equilibrium exchange rate
  - managed exchange rate system
  - Managed exchange rates
  - managed rate
  - misalignment
  - policy-managed exchange rate
  - Real exchange rate
  - Real exchange rates
  - simulations
  - single-equation approach
  - spot rate
  - system vector error correction result
  - Thai baht exchange rate
  - time-series analysis
  - trade equation approach
  - WP

---

## Content in this bundle

- **Misalignment and Managed Exchange Rates:  An Application to the Thai Baht - WP/00/63**
  - [Misalignment and Managed Exchange Rates:  An Application to the Thai Baht - WP/00/63 (Markdown version)](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2000/_wp0063.pdf.md){rel="alternate" type="text/markdown"}
  - [Misalignment and Managed Exchange Rates:  An Application to the Thai Baht - WP/00/63 (PDF)](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2000/_wp0063.pdf){rel="external" type="application/pdf"}

---

_Source: https://www.imf.org/en/publications/wp/issues/2016/12/30/misalignment-and-managed-exchange-rates-an-application-to-the-thai-baht-3514_