Proposed Strategy for a Regional Exchange Rate Arrangement in Post-Crisis East Asia
After discussing major conceptual, and empirical issues relevant to the exchange rate policies of East Asian countries, the authors propose a regional exchange rate arrangement designed to promote intra-regional exchange rate stability, and regiona...
| Main Authors: | , |
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2014
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2000/12/828284/proposed-strategy-regional-exchange-rate-arrangement-post-crisis-east-asia http://hdl.handle.net/10986/19756 |
| id |
okr-10986-19756 |
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| recordtype |
oai_dc |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
AGGREGATE DEMAND AGGREGATE SUPPLY AUTOREGRESSION BALANCE SHEETS BILATERAL TRADE BUSINESS CYCLE BUSINESS CYCLES CAPITA INCOME CAPITAL ACCOUNT CAPITAL INFLOWS CAPITAL MARKETS CAPITAL MOBILITY CAPITAL OUTFLOWS COMMON CURRENCY COMPETITIVENESS CONVERTIBILITY CURRENCY AREAS CURRENCY BOARD CURRENCY CRASHES CURRENCY DEPRECIATION CURRENCY DEVALUATION CURRENCY SWAPS DEUTSCHE MARK DEVELOPING COUNTRIES DEVELOPING COUNTRY DIVERSIFICATION DOMESTIC INTEREST RATES DOMESTIC PRICE ECONOMIC GROWTH ECONOMIC SIZE ECONOMISTS EMERGING COUNTRIES EMPIRICAL EVIDENCE EMPLOYMENT EQUILIBRIUM EURO EUROPEAN MONETARY SYSTEM EXCESS SUPPLY EXCHANGE RATE EXCHANGE RATE ARRANGEMENTS EXCHANGE RATE CHANGES EXCHANGE RATE DEPRECIATION EXCHANGE RATE FLEXIBILITY EXCHANGE RATE PEGS EXCHANGE RATE POLICIES EXCHANGE RATE POLICY EXCHANGE RATE REGIME EXCHANGE RATE REGIMES EXCHANGE RATE RISK EXCHANGE RATE STABILITY EXCHANGE RATE VARIABILITY EXPECTED RETURNS EXPORTS EXTERNAL DEBT EXTERNAL SHOCKS FIXED EXCHANGE RATE FIXED EXCHANGE RATES FLEXIBLE EXCHANGE RATES FLOATING EXCHANGE RATE FLOATING EXCHANGE RATES FOREIGN CURRENCY FOREIGN EXCHANGE FOREIGN EXCHANGE MARKET FOREIGN EXCHANGE MARKETS FOREIGN EXCHANGE RESERVES FOREIGN EXCHANGE RISK GROWTH MOMENTUM GROWTH RATE HIGH RATES IMPORTS INCOME COUNTRIES INDUSTRIAL COUNTRIES INFLATION INTEREST RATE INTEREST RATES INTERNATIONAL CAPITAL FLOWS INTERNATIONAL MONETARY FUND INTERNATIONAL RESERVES INTERNATIONAL TRADE JAPANESE YEN KOREAN WON LABOR MARKETS LOCAL CURRENCY MACROECONOMIC POLICIES MACROECONOMIC POLICY MARKET ECONOMIES MONETARY AGGREGATES MONETARY AUTHORITIES MONETARY POLICIES MONETARY POLICY MONETARY UNION NOMINAL EXCHANGE RATE NOMINAL STABILITY NUMERAIRE OPEN ECONOMIES OPPORTUNITY COST PER CAPITA INCOME POLICY RESEARCH PRESENT VALUE PRICE FLUCTUATIONS PRICE LEVELS PRICE STABILITY PRIVATE SECTOR PURCHASING POWER PURCHASING POWER PARITY QUANTITATIVE ASSESSMENT REAL APPRECIATION REAL EXCHANGE REAL EXCHANGE RATE REAL GDP REAL OUTPUT RESOURCE ALLOCATION RISK AVERSE RISK PREMIA RISK PREMIUM SAVINGS SECURITIES STABILIZATION STANDARD DEVIATION TERMS OF TRADE TRADABLE GOODS VOLATILITY VULNERABILITY |
| spellingShingle |
AGGREGATE DEMAND AGGREGATE SUPPLY AUTOREGRESSION BALANCE SHEETS BILATERAL TRADE BUSINESS CYCLE BUSINESS CYCLES CAPITA INCOME CAPITAL ACCOUNT CAPITAL INFLOWS CAPITAL MARKETS CAPITAL MOBILITY CAPITAL OUTFLOWS COMMON CURRENCY COMPETITIVENESS CONVERTIBILITY CURRENCY AREAS CURRENCY BOARD CURRENCY CRASHES CURRENCY DEPRECIATION CURRENCY DEVALUATION CURRENCY SWAPS DEUTSCHE MARK DEVELOPING COUNTRIES DEVELOPING COUNTRY DIVERSIFICATION DOMESTIC INTEREST RATES DOMESTIC PRICE ECONOMIC GROWTH ECONOMIC SIZE ECONOMISTS EMERGING COUNTRIES EMPIRICAL EVIDENCE EMPLOYMENT EQUILIBRIUM EURO EUROPEAN MONETARY SYSTEM EXCESS SUPPLY EXCHANGE RATE EXCHANGE RATE ARRANGEMENTS EXCHANGE RATE CHANGES EXCHANGE RATE DEPRECIATION EXCHANGE RATE FLEXIBILITY EXCHANGE RATE PEGS EXCHANGE RATE POLICIES EXCHANGE RATE POLICY EXCHANGE RATE REGIME EXCHANGE RATE REGIMES EXCHANGE RATE RISK EXCHANGE RATE STABILITY EXCHANGE RATE VARIABILITY EXPECTED RETURNS EXPORTS EXTERNAL DEBT EXTERNAL SHOCKS FIXED EXCHANGE RATE FIXED EXCHANGE RATES FLEXIBLE EXCHANGE RATES FLOATING EXCHANGE RATE FLOATING EXCHANGE RATES FOREIGN CURRENCY FOREIGN EXCHANGE FOREIGN EXCHANGE MARKET FOREIGN EXCHANGE MARKETS FOREIGN EXCHANGE RESERVES FOREIGN EXCHANGE RISK GROWTH MOMENTUM GROWTH RATE HIGH RATES IMPORTS INCOME COUNTRIES INDUSTRIAL COUNTRIES INFLATION INTEREST RATE INTEREST RATES INTERNATIONAL CAPITAL FLOWS INTERNATIONAL MONETARY FUND INTERNATIONAL RESERVES INTERNATIONAL TRADE JAPANESE YEN KOREAN WON LABOR MARKETS LOCAL CURRENCY MACROECONOMIC POLICIES MACROECONOMIC POLICY MARKET ECONOMIES MONETARY AGGREGATES MONETARY AUTHORITIES MONETARY POLICIES MONETARY POLICY MONETARY UNION NOMINAL EXCHANGE RATE NOMINAL STABILITY NUMERAIRE OPEN ECONOMIES OPPORTUNITY COST PER CAPITA INCOME POLICY RESEARCH PRESENT VALUE PRICE FLUCTUATIONS PRICE LEVELS PRICE STABILITY PRIVATE SECTOR PURCHASING POWER PURCHASING POWER PARITY QUANTITATIVE ASSESSMENT REAL APPRECIATION REAL EXCHANGE REAL EXCHANGE RATE REAL GDP REAL OUTPUT RESOURCE ALLOCATION RISK AVERSE RISK PREMIA RISK PREMIUM SAVINGS SECURITIES STABILIZATION STANDARD DEVIATION TERMS OF TRADE TRADABLE GOODS VOLATILITY VULNERABILITY Kawai, Masahiro Takagi, Shinji Proposed Strategy for a Regional Exchange Rate Arrangement in Post-Crisis East Asia |
| geographic_facet |
East Asia and Pacific East Asia |
| relation |
Policy Research Working Paper;No. 2503 |
| description |
After discussing major conceptual, and
empirical issues relevant to the exchange rate policies of
East Asian countries, the authors propose a regional
exchange rate arrangement designed to promote intra-regional
exchange rate stability, and regional economic growth. They
argue that: 1) For developing countries, exchange rate
volatility tends to significantly hurt trade and investment,
making it inadvisable to adopt a system of freely floating
exchange rates. 2) Given the high share of intra-regional
trade, and the similarity of trade composition in East Asia,
exchange rate policy should be directed toward maintaining
intra-regional exchange rate stability, to promote trade,
investment, and economic growth. 3) the current policy of
maintaining exchange rate stability against U.S. dollar as
an informal, uncoordinated mechanisms for ensuring
intra-regional exchange rate stability is sub-optimal. A
pragmatic policy option - conducive to a more robust
framework for cooperation in monetary, and exchange rate
policy - wold be a coordinated action to shift the target of
nominal exchange rate stability, to a basket of tri-polar
currencies (the U.S. dollar, the Japanese yen, and the
Euro). This alternative would better reflect the
region's diverse structure of trade, and foreign direct
investment. The authors envision no rigid peg. Instead, at
least initially, each country could choose its own formal
exchange rate arrangement - be it currency board, a crawling
peg, or a basket peg with wide margins. At times of crisis,
the peg might be temporarily suspended, subject to the rule
that the exchange rate would be restored to the original
level as soon as practical. Only in extreme circumstances,
would the level be adjusted to reflect new equilibrium conditions. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Kawai, Masahiro Takagi, Shinji |
| author_facet |
Kawai, Masahiro Takagi, Shinji |
| author_sort |
Kawai, Masahiro |
| title |
Proposed Strategy for a Regional Exchange Rate Arrangement in Post-Crisis East Asia |
| title_short |
Proposed Strategy for a Regional Exchange Rate Arrangement in Post-Crisis East Asia |
| title_full |
Proposed Strategy for a Regional Exchange Rate Arrangement in Post-Crisis East Asia |
| title_fullStr |
Proposed Strategy for a Regional Exchange Rate Arrangement in Post-Crisis East Asia |
| title_full_unstemmed |
Proposed Strategy for a Regional Exchange Rate Arrangement in Post-Crisis East Asia |
| title_sort |
proposed strategy for a regional exchange rate arrangement in post-crisis east asia |
| publisher |
World Bank, Washington, DC |
| publishDate |
2014 |
| url |
http://documents.worldbank.org/curated/en/2000/12/828284/proposed-strategy-regional-exchange-rate-arrangement-post-crisis-east-asia http://hdl.handle.net/10986/19756 |
| _version_ |
1764440556560187392 |
| spelling |
okr-10986-197562021-04-23T14:03:44Z Proposed Strategy for a Regional Exchange Rate Arrangement in Post-Crisis East Asia Kawai, Masahiro Takagi, Shinji AGGREGATE DEMAND AGGREGATE SUPPLY AUTOREGRESSION BALANCE SHEETS BILATERAL TRADE BUSINESS CYCLE BUSINESS CYCLES CAPITA INCOME CAPITAL ACCOUNT CAPITAL INFLOWS CAPITAL MARKETS CAPITAL MOBILITY CAPITAL OUTFLOWS COMMON CURRENCY COMPETITIVENESS CONVERTIBILITY CURRENCY AREAS CURRENCY BOARD CURRENCY CRASHES CURRENCY DEPRECIATION CURRENCY DEVALUATION CURRENCY SWAPS DEUTSCHE MARK DEVELOPING COUNTRIES DEVELOPING COUNTRY DIVERSIFICATION DOMESTIC INTEREST RATES DOMESTIC PRICE ECONOMIC GROWTH ECONOMIC SIZE ECONOMISTS EMERGING COUNTRIES EMPIRICAL EVIDENCE EMPLOYMENT EQUILIBRIUM EURO EUROPEAN MONETARY SYSTEM EXCESS SUPPLY EXCHANGE RATE EXCHANGE RATE ARRANGEMENTS EXCHANGE RATE CHANGES EXCHANGE RATE DEPRECIATION EXCHANGE RATE FLEXIBILITY EXCHANGE RATE PEGS EXCHANGE RATE POLICIES EXCHANGE RATE POLICY EXCHANGE RATE REGIME EXCHANGE RATE REGIMES EXCHANGE RATE RISK EXCHANGE RATE STABILITY EXCHANGE RATE VARIABILITY EXPECTED RETURNS EXPORTS EXTERNAL DEBT EXTERNAL SHOCKS FIXED EXCHANGE RATE FIXED EXCHANGE RATES FLEXIBLE EXCHANGE RATES FLOATING EXCHANGE RATE FLOATING EXCHANGE RATES FOREIGN CURRENCY FOREIGN EXCHANGE FOREIGN EXCHANGE MARKET FOREIGN EXCHANGE MARKETS FOREIGN EXCHANGE RESERVES FOREIGN EXCHANGE RISK GROWTH MOMENTUM GROWTH RATE HIGH RATES IMPORTS INCOME COUNTRIES INDUSTRIAL COUNTRIES INFLATION INTEREST RATE INTEREST RATES INTERNATIONAL CAPITAL FLOWS INTERNATIONAL MONETARY FUND INTERNATIONAL RESERVES INTERNATIONAL TRADE JAPANESE YEN KOREAN WON LABOR MARKETS LOCAL CURRENCY MACROECONOMIC POLICIES MACROECONOMIC POLICY MARKET ECONOMIES MONETARY AGGREGATES MONETARY AUTHORITIES MONETARY POLICIES MONETARY POLICY MONETARY UNION NOMINAL EXCHANGE RATE NOMINAL STABILITY NUMERAIRE OPEN ECONOMIES OPPORTUNITY COST PER CAPITA INCOME POLICY RESEARCH PRESENT VALUE PRICE FLUCTUATIONS PRICE LEVELS PRICE STABILITY PRIVATE SECTOR PURCHASING POWER PURCHASING POWER PARITY QUANTITATIVE ASSESSMENT REAL APPRECIATION REAL EXCHANGE REAL EXCHANGE RATE REAL GDP REAL OUTPUT RESOURCE ALLOCATION RISK AVERSE RISK PREMIA RISK PREMIUM SAVINGS SECURITIES STABILIZATION STANDARD DEVIATION TERMS OF TRADE TRADABLE GOODS VOLATILITY VULNERABILITY After discussing major conceptual, and empirical issues relevant to the exchange rate policies of East Asian countries, the authors propose a regional exchange rate arrangement designed to promote intra-regional exchange rate stability, and regional economic growth. They argue that: 1) For developing countries, exchange rate volatility tends to significantly hurt trade and investment, making it inadvisable to adopt a system of freely floating exchange rates. 2) Given the high share of intra-regional trade, and the similarity of trade composition in East Asia, exchange rate policy should be directed toward maintaining intra-regional exchange rate stability, to promote trade, investment, and economic growth. 3) the current policy of maintaining exchange rate stability against U.S. dollar as an informal, uncoordinated mechanisms for ensuring intra-regional exchange rate stability is sub-optimal. A pragmatic policy option - conducive to a more robust framework for cooperation in monetary, and exchange rate policy - wold be a coordinated action to shift the target of nominal exchange rate stability, to a basket of tri-polar currencies (the U.S. dollar, the Japanese yen, and the Euro). This alternative would better reflect the region's diverse structure of trade, and foreign direct investment. The authors envision no rigid peg. Instead, at least initially, each country could choose its own formal exchange rate arrangement - be it currency board, a crawling peg, or a basket peg with wide margins. At times of crisis, the peg might be temporarily suspended, subject to the rule that the exchange rate would be restored to the original level as soon as practical. Only in extreme circumstances, would the level be adjusted to reflect new equilibrium conditions. 2014-08-27T17:03:50Z 2014-08-27T17:03:50Z 2000-12 http://documents.worldbank.org/curated/en/2000/12/828284/proposed-strategy-regional-exchange-rate-arrangement-post-crisis-east-asia http://hdl.handle.net/10986/19756 English en_US Policy Research Working Paper;No. 2503 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research East Asia and Pacific East Asia |