Real exchange rate and its fundamentals: estimation of the misalignment

This article examines the real exchange rate misalignment in Peru by comparing two approaches: the Fundamental Equilibrium Macroeconomic (FEER) model and the Equilibrium Real Exchange Rate Behavior (BEER) model. The analysis covers the period from 1980 to 2001, using quarterly data and taking into account factors such as productivity, the degree of trade openness, and the interest rate spread. The study applies robust econometric methodologies, including cointegration tests and dynamic ordinary least squares. The results show that both approaches indicate a real exchange rate misalignment, although the magnitudes and trends differ: the FEER reveals overvaluation since 1993, while the BEER shows a similar pattern, suggesting a significant adjustment in 1998. The policy implications suggest that decisions regarding the exchange rate should consider not only domestic equilibrium but also the sustainability of the current account in the face of external shocks, thereby contributing to a comprehensive approach to exchange rate policy management. (Abstract and audio: Department of Economic Publications)