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Exchange Rate Arrangements (exchange + rate_arrangement)

Distribution by Scientific Domains
Business, Economics, Finance and Accounting100%

Selected Abstracts

REVALUATION PRESSURE AND NEW EXCHANGE RATE ARRANGEMENTS FOR EAST ASIA: A SYMPOSIUM

PACIFIC ECONOMIC REVIEW, Issue 1 2008
George M. Von FurstenbergArticle first published online: 9 JAN 200
Its venue, Villa Serbelloni, was made available by the Rockefeller Foundation. Reforms of the international monetary and financial system have been discussed there since the 1960s. As was the case then, the focus of the conference was once again on the declining international anchor functions and relations with the US dollar, but this time in and with continental East Asia, rather than Europe and Japan. [source]

Does Exchange Rate Policy Matter for Growth?

INTERNATIONAL FINANCE, Issue 3 2003
Jeannine Bailliu
Previous studies on whether the nature of the exchange rate regime influences a country's medium-term growth performance have been based on a tripartite classification scheme that distinguishes between pegged, intermediate and flexible exchange rate regimes. This classification scheme, however, leads to a situation where two of the categories (intermediate and flexible) characterize solely the exchange rate regime, whereas the third (pegged) characterizes both the exchange rate regime and the monetary policy framework. Our study refines this classification scheme by accounting for different monetary policy frameworks, classifying monetary arrangements based on the presence of an explicit monetary policy ,anchor', such as the exchange rate or other targeted nominal variable. We estimate the impact of exchange rate arrangements on growth in a panel-data set of 60 countries over the period 1973,1998. We find evidence that exchange rate regimes characterized by a monetary policy anchor, whether they are pegged, intermediate, or flexible, exert a positive influence on economic growth. We also find evidence that intermediate/flexible regimes without an anchor are detrimental for growth. Our results thus suggest that it is the presence of a monetary policy anchor, rather than the type of exchange rate regime per se, that is important for economic growth. Furthermore, our work emphasizes the importance of considering the monetary policy framework that accompanies the exchange rate arrangement when assessing the macroeconomic performance of alternative exchange rate regimes. [source]

FEAR OF FLOATING IN EAST ASIA?

PACIFIC ECONOMIC REVIEW, Issue 2 2009
Soyoung Kim
Abstract., We examine the de facto exchange rate arrangements in eight East Asian countries during the post-Asian crisis period. The empirical results suggest that three countries adopted a hard peg or a peg with capital account restrictions, whereas five countries moved toward a more flexible exchange rate arrangement in the post-crisis period. Three of these five countries (Korea, Indonesia and Thailand) achieved a level of exchange rate flexibility close to the level accomplished in a free floater such as Australia. These results suggest that ,fear of floating' in East Asia is not prevalent in the post-crisis period, supporting the bipolar view of the optimal exchange rate regime. [source]

The international monetary system in the last and next 20 years

ECONOMIC POLICY, Issue 47 2006
Barry Eichengreen
SUMMARY The evolution of exchange rate regimes The last two decades have seen far-reaching changes in the structure of the international monetary system. Europe moved from the European Monetary System to the euro. China adopted a dollar peg and then moved to a basket, band and crawl in 2005. Emerging markets passed through a series of crises, leading some to adopt regimes of greater exchange rate flexibility and others to rethink the pace of capital account liberalization. Interpreting these developments is no easy task: some observers conclude that recent trends are confirmation of the ,bipolar view' that intermediate exchange rate arrangements are disappearing, while members of the ,fear of floating school' conclude precisely the opposite. We show that the two views can be reconciled if one distinguishes countries by their stage of economic and financial development. Among the advanced countries, intermediate regimes have essentially disappeared; this supports the bipolar view for the group of countries for which it was first developed. Within this subgroup, the dominant movement has been toward hard pegs, reflecting monetary unification in Europe. While emerging markets have also seen a decline in the prevalence of intermediate arrangements, these regimes still account for more than a third of the relevant subsample. Here the majority of the evacuees have moved to floats rather than fixes, reflecting the absence of EMU-like arrangements in other parts of the world. Among developing countries, the prevalence of intermediate regimes has again declined, but less dramatically. Where these regimes accounted for two-thirds of the developing country subsample in 1990, they account for a bit more than half of that subsample today. As with emerging markets, the majority of those abandoning the middle have moved to floats rather than hard pegs. The gradual nature of these trends does not suggest that intermediate regimes will disappear outside the advanced countries anytime soon. , Barry Eichengreen and Raul Razo-Garcia [source]

Interest Rate Volatility Prior to Monetary Union under Alternative Pre-Switch Regimes

GERMAN ECONOMIC REVIEW, Issue 4 2003
Bernd Wilfling
Interest rate volatility; term structure; exchange rate arrangements; intervention policy; stochastic processes Abstract. The volatility of interest rates is relevant for many financial applications. Under realistic assumptions the term structure of interest rate differentials provides an important predictor of the term structure of interest rates. This paper derives the term structure of differentials in a situation in which two open economies plan to enter a monetary union in the future. Two systems of floating exchange rates prior to the union are considered, namely a free-float and a managed-float regime. The volatility processes of arbitrary-term differentials under the respective pre-switch arrangements are compared. The paper elaborates the singularity of extremely short-term (i.e. instantaneous) interest rates under extensive leaning-against-the-wind interventions and discusses policy issues. [source]

Does Exchange Rate Policy Matter for Growth?

INTERNATIONAL FINANCE, Issue 3 2003
Jeannine Bailliu
Previous studies on whether the nature of the exchange rate regime influences a country's medium-term growth performance have been based on a tripartite classification scheme that distinguishes between pegged, intermediate and flexible exchange rate regimes. This classification scheme, however, leads to a situation where two of the categories (intermediate and flexible) characterize solely the exchange rate regime, whereas the third (pegged) characterizes both the exchange rate regime and the monetary policy framework. Our study refines this classification scheme by accounting for different monetary policy frameworks, classifying monetary arrangements based on the presence of an explicit monetary policy ,anchor', such as the exchange rate or other targeted nominal variable. We estimate the impact of exchange rate arrangements on growth in a panel-data set of 60 countries over the period 1973,1998. We find evidence that exchange rate regimes characterized by a monetary policy anchor, whether they are pegged, intermediate, or flexible, exert a positive influence on economic growth. We also find evidence that intermediate/flexible regimes without an anchor are detrimental for growth. Our results thus suggest that it is the presence of a monetary policy anchor, rather than the type of exchange rate regime per se, that is important for economic growth. Furthermore, our work emphasizes the importance of considering the monetary policy framework that accompanies the exchange rate arrangement when assessing the macroeconomic performance of alternative exchange rate regimes. [source]

FEAR OF FLOATING IN EAST ASIA?

PACIFIC ECONOMIC REVIEW, Issue 2 2009
Soyoung Kim
Abstract., We examine the de facto exchange rate arrangements in eight East Asian countries during the post-Asian crisis period. The empirical results suggest that three countries adopted a hard peg or a peg with capital account restrictions, whereas five countries moved toward a more flexible exchange rate arrangement in the post-crisis period. Three of these five countries (Korea, Indonesia and Thailand) achieved a level of exchange rate flexibility close to the level accomplished in a free floater such as Australia. These results suggest that ,fear of floating' in East Asia is not prevalent in the post-crisis period, supporting the bipolar view of the optimal exchange rate regime. [source]

The Real Exchange Rate Always Floats

AUSTRALIAN ECONOMIC PAPERS, Issue 4 2002
Thorvaldur Gylfason
This paper makes two main points. First, irrespective of nominal exchange rate arrangements, the real exchange rate always floats , if not through nominal exchange rate adjustment, then through price change. Further, because prices and wages tend to be sticky, the adjustment of real exchange rates towards long,run equilibrium takes time, as witnessed by long,lasting currency misalignments around the world. In second place, real exchange rates are rather likely to fluctuate on their way towards long,run equilibrium because of the dynamic interaction between real exchange rates and the current account or, put differently, because the structure of lags with which exchange rates impact the volume of exports and imports may give rise to oscillatory behaviour. [source]