Exchange Rate Policies in Emerging Asian Countries

by Collignon; Stefan

• ISBN13: 9780415178525
• ISBN10: 0415178525
• eBook ISBN(s): 9781134683796
• Edition: 1st
• Format: Hardcover
• Copyright: 1999-07-08
• Publisher: Routledge

Summary

This book discusses the future of Asian currencies in a changing monetary system assessing the roles of the dollar, Euro and yen, particularly in light of the emergence of a European monetary zone.

Table of Contents

List of figures	p. xi
List of tables	p. xv
List of contributors	p. xviii
Editors' introduction	p. xx
Acknowledgements	p. xxviii
Exchange rate policies in Asia: the evidence	p. 1
Flexibility or nominal anchors?	p. 3
The setting	p. 4
The convertibility issue	p. 11
Exchange rate choices: fixed rates	p. 12
Exchange rate choices: flexible rates	p. 15
Exchange rate choices: band-basket-crawl (BBC)	p. 16
Conclusion: nominal anchor or flexibility?	p. 23
Exchange rate regimes of East Asian countries	p. 24
Discussion	p. 35
The setting	p. 35
Convertibility	p. 36
Fixed rates	p. 36
Floating rates and band-basket-crawl	p. 37
Exchange rate regimes and policies: an empirical analysis	p. 40
Introduction	p. 40
De facto exchange rate regimes in Asia	p. 41
Rationale for exchange rate policies in Asia	p. 49
Summary and concluding remarks	p. 56
Computing long-run estimates	p. 57
Unit root and cointegration analysis, 1973-93	p. 58
Asian external trade	p. 59
Discussion	p. 65
Exchange Rate Policy and Effectiveness of Intervention: the case of South Korea	p. 69
Introduction	p. 69
Exchange rate system and movement of the exchange rate in the 1980s and 1990s	p. 70
Current account, capital flows and exchange rate	p. 80
Foreign exchange market intervention	p. 89
Concluding remarks	p. 99
Discussion	p. 105
Foreign Exchange Rate Fluctuations and Macroeconomic Management: the case of Taiwan	p. 109
Introduction	p. 109
A review of Taiwan's exchange rate regime	p. 110
The movement of REER index of NTD since 1980	p. 116
Factors that affect the fluctuations of NTD	p. 117
Consequences of NTD fluctuations	p. 128
Macroeconomic policies regarding exchange rate fluctuations	p. 132
Intermarket relationship between foreign exchange rate and interest rate	p. 138
Concluding remarks	p. 140
Discussion	p. 143
Exchange rates and economic development: long-run views	p. 147
Industrialization and the optimal real exchange rate policy for an emerging economy	p. 149
Introduction	p. 149
Two approaches to industrialization: active and interventionist (Asia) or passive and free-marketeer (Latin America)	p. 152
The pitfalls of optimal industrialization policies	p. 154
The logic of price incentives and industrialization: a model	p. 155
Three complementary arguments to the optimal policy	p. 159
A view of two benchmark cases: Chile and South Korea	p. 167
Conclusions	p. 176
Discussion	p. 185
Asian currencies in the context of export-oriented industrial development	p. 188
Introduction	p. 188
Typical stages of Asian industrial development	p. 189
Stages of industrial development, currency theory and behaviour: a life cycle model of Asian currencies	p. 191
Empirical methodology and results	p. 193
The life cycle model and selected Asian currencies	p. 197
The current life cycle stages of Asian currencies looking at recent cross-section data	p. 204
Medium-term outlook for Asian currencies based on life cycle hypothesis: North-East Asia and ASEAN	p. 204
Conclusion and implications of an Asian currency life cycle model	p. 211
Appendix 1(a)	p. 212
Appendix 1(b)	p. 214
Discussion	p. 219
Measuring exchange rate misalignments with purchasing power parity estimates	p. 222
The Balassa--Samuelson effect and its application to measure exchange rate misalignments: a brief review	p. 223
An extended Balassa--Samuelson model	p. 227
Data and econometric estimates	p. 230
Implications for exchange rate levels in emerging Asia	p. 234
Conclusion	p. 239
Discussion	p. 243
FEERs for the NICs: exchange rate policies and development strategies in Taiwan, South Korea, Singapore and Thailand	p. 245
The growth experience of South Korea, Singapore, Taiwan and Thailand	p. 245
Exchange rate policies -- the concept of equilibrium	p. 249
Econometric models of Singapore, Thailand, South Korea and Taiwan	p. 252
Exchange rates and development policies in East Asia	p. 257
Conclusions	p. 270
The econometric models in detail	p. 271
Discussion	p. 280
Defining the external balance: the case of NIEs	p. 280
The role of the US dollar and the need for a global approach	p. 282
Regional monetary cooperation: rationale and effects	p. 283
Bloc floating and exchange rate volatility: the causes and consequences of currency blocs	p. 285
Introduction	p. 285
Investment and exchange risk reduction: why currency blocs emerge	p. 289
The consequences of bloc floating for equilibrium exchange rates in a bloc-floating regime	p. 297
Empirical evidence of bloc-floating effects	p. 307
Conclusion	p. 317
Discussion	p. 323
The case for a common basket peg for East Asian currencies	p. 327
Exchange rate policies	p. 327
Evaluation	p. 331
Selecting a peg	p. 332
The constraints imposed by a common peg	p. 340
Discussion	p. 344
Is Asia an optimum currency area? Can it become one? Regional, global, and historical perspectives on Asian monetary relations	p. 347
How have Asian exchange rate arrangements evolved?	p. 348
Regional perspectives	p. 351
Historical perspectives	p. 360
Conclusion	p. 364
Discussion	p. 367
Roundtable discussion: prospects for regional monetary cooperation	p. 369
Jean Pisani-Ferry	p. 369
Masabiro Sugita	p. 369
In June Kim	p. 372
Andre Icard	p. 376
Toru Kusukawa	p. 381
Adriaan Dierx	p. 383
The currency crisis in Thailand	p. 389
The prelude to the currency crisis and the present state of the Thai economy	p. 390
Factors behind Thailand's currency turmoil	p. 396
Impact of Thailand's currency crisis	p. 408
Conclusions	p. 414
Index	p. 417
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