Dynamic Analysis of the Exchange Rate Regime: Policy Implications for Emerging Countries in East Asia

Naoyuki Yoshino, Sahoko Kaji, Tamon Asonuma

Research output: Contribution to journalArticle

4 Citations (Scopus)

Abstract

This paper discusses exchange rate policies in East Asia. In particular, we explore whether actual policies that have been implemented by East Asian countries after the Asian Financial Crisis follow or deviate from theoretically "desirable" policies over the medium and long terms. On theoretical analysis, we show the relative superiority of a basket-peg regime with the basket weight rule when compared with a floating regime implementing the interest rate rule or money supply rule. For countries that currently adopt a fixed exchange rate regime, they would be better off shifting toward either a basket-peg or a floating regime over the medium term. A shift to a basket peg is more preferred when compared with a shift to a floating regime when the exchange rate fluctuations are large.

Original languageEnglish
Pages (from-to)624-637
Number of pages14
JournalReview of Development Economics
Volume19
Issue number3
DOIs
Publication statusPublished - 2015

ASJC Scopus subject areas

  • Geography, Planning and Development
  • Development

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