In this paper evidence on whether Hong Kong's currency board arrangement, in place since 1983, has affected volatility of real macroeconomic variables is presented. Simple evidence on the relative volatilities of relevant macroeconomic variables pre and post 1983 is presented, before a more formal econometric framework is utilised to examine the linkages between the exchange rate and the real economy. It is found that the currency board period has been one of relative stability in Hong Kong, though it has also been a period where external factors have been relatively benign. Even after controlling for the external environment it is found that the currency board period is one of low macroeconomic volatility.
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Length: 35 pages Date of creation: 2000 Date of revision: Handle: RePEc:mlb:wpaper:749
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Find related papers by JEL classification: E27 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation F31 - International Economics - - International Finance - - - Foreign Exchange
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