Exchange Rate Misalignment Estimates – Sources of Differences*
نویسندگان
چکیده
We investigate the implications of the new price information in the latest International Comparison Program (ICP) survey for evaluating the year 2005 exchange rate misalignment estimates. A decomposition exercise reveals that the misalignment revisions are substantially affected by the ICP price updates. Two measurement-related and four economic factors are used to explain the differences in misalignment estimates. We found that, in general, these factors a) explain the misalignment revisions between the two WDI datasets better than the differences of misalignment estimates between WDI and PWT datasets, and b) explain the positive changes better than the negative ones. These factors could explain upto 42% of the differences between these misalignment estimates. JEL Classifications: F31, F41, E01, C31
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