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Exchange Rate Policy and Regional Trade Agreements : A Case of Conflicted Interests?

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  • Richard Pomfret

    (Asian Development Bank Institute (ADBI))

  • Victor Pontines

Abstract

The results highlight the conflicting interests of countries — to stabilize exchange rates or to keep the option of exchange rate depreciation in order to maintain competitiveness of domestic tradable producers. With deepening integration in East Asia, however, the desire for exchange rate stability will eventually outweigh the desire to maintain a protectionist tool. How extensive the pressures will be in East Asia will depend not only on how many countries seriously desire to be in the more integrated economic area in which Factory Asia operates, but also on their institutional and political readiness to commit in such schemes at the cost of renouncing an important policy instrument.

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Bibliographic Info

Paper provided by East Asian Bureau of Economic Research in its series Trade Working Papers with number 23713.

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Date of creation: Oct 2013
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Handle: RePEc:eab:tradew:23713

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Postal: JG Crawford Building #13, Asia Pacific School of Economics and Government, Australian National University, ACT 0200
Web page: http://www.eaber.org
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Keywords: Regional Trade Agreements; exchange rate policy; East Asia; exchange rate stability; domestic tradeable producers;

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