Interpretation
A value of 1.0 represents CABEM equilibrium.
Values greater than 1.0 indicate that the first economy would require relative appreciation under a CABEM regime, while values below 1.0 indicate relative depreciation.
For example, a value of 0.75 implies that the first economy would require an adjustment of approximately −25% relative to the comparison economy to reach equilibrium. Conversely, the reciprocal value of 1.33 implies an adjustment of approximately +33% in the opposite direction.
In the present implementation, ΔM is assumed to equal 1 for all economies. This simplification is intentional and avoids introducing a potentially controversial choice of monetary aggregate (M1, M2, M3, or alternative measures). The integration of monetary dynamics across multiple observation periods remains deliberately open for future agreements.