Today marks the grim anniversary of Russia’s full-scale invasion of Ukraine on February 24, 2022. Yet the conflict since 2022 is in many ways larger than the current military operations on the ground, both in terms of time and space. It is of course only the latest and most intense iteration of Russian aggression in […]

FX fair value estimates for 13 economies across LatAm at end-2023 underscore the idiosyncrasies of recent current account dynamics in the region… …while also highlighting V- and L-shape nominal performance against USD since the pandemic in several countries,… …even as the inflationary spike in ~2022 continues to abate across the main economies covered below. As […]

As in other parts of the world, several Latin American economies saw their real exchange rates weaken during the pandemic only to rebound sharply amid the global inflationary shock. This v-shape trajectory of LatAm REERs is most evident in Peru and Costa Rica but is also visible to varying extents in Brazil, Colombia, the Dominican […]

FX fair value estimates for 13 economies across CEEMEA at end-2023 underscore the impact of the war in Ukraine. Real effective exchange rates spiked in various countries following the successive pandemic-Ukraine shocks… …although Morocco and Croatia appear to be bastions of REER stability in an otherwise volatile group. One way to value a currency is […]

One way to value a currency is to assess the link between current account balances and real effective exchange rates, which merge the nominal exchange rate with the ratio of domestic to trade-weighted foreign prices. The IMF uses a fair value model that compares “equilibrium” to “underlying” CABs, with any difference a result of REER […]

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Following on from my estimates of current account equilibria in advanced economies, here I turn to emerging markets, which is after all the focus of this blog. I initially focused on AEs in an attempt to replicate as closely as possible an IMF empirical investigation of current account balances in this set of countries, as […]

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Have you ever wondered what a country’s current account balance should be? If you’re a macroeconomist or investor, then chances are that you have. While plenty has been written on how to measure “equilibrium” current account balances, to my knowledge there is precious little publicly-available information as to what these actually are. So I’ve drawn […]

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Building on recent work on how to measure deviations of actual GDP from potential GDP, known as an output gap, I’m pleased to reveal a world map of results for 2023. Remember that an output gap is positive when actual GDP is above potential – or trend – and negative when it is below. In […]

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