## Evaluating Historical CGER Assessments: How Well Have They Predicted Subsequent Exchange Rate Movements?

_IMF Working Papers, February 1, 2009_

## Source details

**Canonical URL:** [Evaluating Historical CGER Assessments: How Well Have They Predicted Subsequent Exchange Rate Movements?](https://www.imf.org/en/publications/wp/issues/2016/12/31/evaluating-historical-cger-assessments-how-well-have-they-predicted-subsequent-exchange-rate-22692)

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## Bibliographic details
- Authors: Jungjin Lee, Abdul d Abiad, Prakash Kannan
- Published: February 1, 2009
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451871791.001

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### Summary findings
- The IMF's Consultative Group on Exchange Rate issues (CGER) conducted exchange rate assessments as part of the surveillance process since 1997.
- This paper evaluates CGER assessments from 1997 to 2006 by comparing these to subsequent movements in real effective exchange rates (REER).
- CGER's estimated misalignments have predictive power over future REER movements, especially:
  - over longer horizons, and
  - after changes in fundamentals are accounted for.
- CGER misalignments frequently predict the direction of currency movements correctly.
- Misalignments have tended to be persistent, resulting in systematic errors:
  - overprediction for undervalued currencies, and
  - underprediction for overvalued currencies.

### Subject and keywords
- Subjects: Currencies; Exchange rate assessments; Exchange rates; Real effective exchange rates; Real exchange rates
- Keywords: interest rate; random walk; WP

*Source: IMF Working Paper — "Evaluating Historical CGER Assessments: How Well Have They Predicted Subsequent Exchange Rate Movements?" by Jungjin Lee, Abdul d Abiad, and Prakash Kannan (February 1, 2009).*

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## Content in this bundle

- **_wp0932 — Box 1: An Overview of CGER Exchange Rate Assessment Methodologies**
  - [_wp0932 — Box 1: An Overview of CGER Exchange Rate Assessment Methodologies (Markdown version)](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2009/_wp0932.pdf.md){rel="alternate" type="text/markdown"}
  - [_wp0932 — Box 1: An Overview of CGER Exchange Rate Assessment Methodologies (PDF)](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2009/_wp0932.pdf){rel="external" type="application/pdf"}

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/31/evaluating-historical-cger-assessments-how-well-have-they-predicted-subsequent-exchange-rate-22692_