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Episodes of Large Exchange Rate Appreciations and Reserves Accumulations in Selected Asian Economies: Is Fear of Appreciation Justified?

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  • Victor Pontines

    ()

  • Reza Siregar

    ()

Abstract

The objective of our paper is to provide an empirical platform to the debate on the macroeconomic consequences of large currency appreciations. Observing the experiences of six major Asian economies (the ASEAN-5 (Indonesia, Malaysia, Philippines, Thailand and Singapore) and Korea) during the past two decades, the primary aim of this study is to ascertain the consequences of strong currencies, on the one hand, and reserves accumulation, on the other, for a set of vital macroeconomic indicators, namely, exports, growth and price. We then deal squarely, in retrospect, with the question of whether there is any justification to the so-called fear of appreciation phenomenon among the policy makers of these Asian economies.

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File URL: http://cama.crawford.anu.edu.au/pdf/working-papers/2012/312012.pdf
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Bibliographic Info

Paper provided by Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University in its series CAMA Working Papers with number 2012-31.

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Length: 42 pages
Date of creation: Jun 2012
Date of revision:
Handle: RePEc:een:camaaa:2012-31

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  1. Marcus Kappler & Helmut Reisen & Moritz Schularick & Edouard Turkisch, 2011. "The Macroeconomic Effects of Large Exchange Rate Appreciations," OECD Development Centre Working Papers 296, OECD Publishing.
  2. Steven B. Kamin & Marc Klau, 2003. "A multi-country comparison of the linkages between inflation and exchange rate competitiveness," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 8(2), pages 167-184.
  3. Valerie Cerra & Sweta Chaman Saxena, 2007. "Growth dynamics: the myth of economic recovery," BIS Working Papers 226, Bank for International Settlements.
  4. Kwack, Sung Yeung & Ahn, Choong Y. & Lee, Young S. & Yang, Doo Y., 2007. "Consistent estimates of world trade elasticities and an application to the effects of Chinese Yuan (RMB) appreciation," Journal of Asian Economics, Elsevier, vol. 18(2), pages 314-330, April.
  5. Terasvirta, T & Anderson, H M, 1992. "Characterizing Nonlinearities in Business Cycles Using Smooth Transition Autoregressive Models," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 7(S), pages S119-36, Suppl. De.
  6. Victor Pontines & Reza Siregar, 2006. "Fundamental Pitfalls of Exchange Market Pressure-Based Approaches to Identification of Currency Crises," Centre for International Economic Studies Working Papers 2006-02, University of Adelaide, Centre for International Economic Studies.
  7. Gupta, Poonam & Mishra, Deepak & Sahay, Ratna, 2007. "Behavior of output during currency crises," Journal of International Economics, Elsevier, vol. 72(2), pages 428-450, July.
  8. Menzie D. Chinn, 2004. "Incomes, Exchange Rates and the US Trade Deficit, Once Again," International Finance, Wiley Blackwell, vol. 7(3), pages 451-469, December.
  9. Jan P. A. M. Lestano, 2007. "Dating currency crises with ad hoc and extreme value-based thresholds: East Asia 1970-2002 [Dating currency crises]," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 12(4), pages 371-388.
  10. Hong, Kiseok & Tornell, Aaron, 2005. "Recovery from a currency crisis: some stylized facts," Journal of Development Economics, Elsevier, vol. 76(1), pages 71-96, February.
  11. Pontines, Victor & Siregar, Reza, 2007. "The Yen, the US dollar, and the trade weighted basket of currencies: Does the choice of anchor currencies matter in identifying incidences of speculative attacks?," Japan and the World Economy, Elsevier, vol. 19(2), pages 214-235, March.
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