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New Rates from New Weights

Author

Listed:
  • Bayoumi, Tamim
  • Lee, Jaewoo
  • Jayanthi, Sarma

Abstract

This paper describes the result and the methodology of updating the IMF's nominal and real effective exchange rate weights on the basis of trade data over 1999-2001. The underlying framework is an updated version of the IMF's current effective exchange rate calculation, which uses weights largely based on 1989-91 data. Since then, substantial changes have occurred in international trade relations, warranting a recalculation of effective exchange rate indices on the basis of new trade patterns. Updated weights show that the United States and developing countries (most notably China) have grown in their importance in global trade, while Japan and the European Union have declined, with substantial implications for the path of the dollar and exchange rate effects of emerging market crises since 1995.

Suggested Citation

  • Bayoumi, Tamim & Lee, Jaewoo & Jayanthi, Sarma, 2006. "New Rates from New Weights," CEPR Discussion Papers 5860, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:5860
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    References listed on IDEAS

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    1. Guillermo A. Calvo & Carmen M. Reinhart, 2002. "Fear of Floating," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 117(2), pages 379-408.
    2. Mr. Dominique Desruelle & Mr. Alessandro Zanello, 1997. "A Primeron the IMF's Information Notice System," IMF Working Papers 1997/071, International Monetary Fund.
    3. International Monetary Fund, 1987. "Measuring Price Competitiveness for Industrial Country Trade in Manufactures," IMF Working Papers 1987/034, International Monetary Fund.
    4. Michael P. Leahy, 1998. "New summary measures of the foreign exchange value of the dollar," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), vol. 84(Oct), pages 811-818, October.
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    More about this item

    Keywords

    Weight; Effective exchange rate;

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F30 - International Economics - - International Finance - - - General

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