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The impact of the appreciation of East Asian currencies on global imbalance

  • Hideki Nishigaki

    ()

    (Hitotsubashi University)

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    Recently, the global current account imbalance has received considerable attention in the international financial market. In this paper, we focus on the relationship between US and East Asia from the perspective of the trade balance and examine whether the appreciation of East Asian currencies against the dollar would affect the respective outputs of East Asia and the US or be effective in reducing the global imbalance. There are few empirical studies directly focused on the trade and output between the US and East Asia. Our empirical results suggest that currency appreciation is expansionary for East Asian economies and will increase the East Asian output, which will contribute to the reduction in US trade deficits.

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    File URL: http://www.accessecon.com/pubs/EB/2007/Volume6/EB-07F30010A.pdf
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    Article provided by AccessEcon in its journal Economics Bulletin.

    Volume (Year): 6 (2007)
    Issue (Month): 42 ()
    Pages: 1-6

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    Handle: RePEc:ebl:ecbull:eb-07f30010
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    1. Blanchard, Olivier Jean & Quah, Danny, 1989. "The Dynamic Effects of Aggregate Demand and Supply Disturbances," American Economic Review, American Economic Association, vol. 79(4), pages 655-73, September.
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    6. Plummer, Michael G., 2003. "Structural change in a globalized Asia: macro trends and US policy challenges," Journal of Asian Economics, Elsevier, vol. 14(2), pages 243-281, April.
    7. Morley, Samuel A, 1992. "On the Effect of Devaluation during Stabilization Programs in LDCs," The Review of Economics and Statistics, MIT Press, vol. 74(1), pages 21-27, February.
    8. Kamal Upadhyaya & Mukti Upadhyay, 1999. "Output effects of devaluation: Evidence from Asia," Journal of Development Studies, Taylor & Francis Journals, vol. 35(6), pages 89-103.
    9. Steven B. Kamin & John H. Rogers, 1997. "Output and the real exchange rate in developing countries: an application to Mexico," International Finance Discussion Papers 580, Board of Governors of the Federal Reserve System (U.S.).
    10. Kim, Yoonbai & Ying, Yung-Hsiang, 2007. "An empirical assessment of currency devaluation in East Asian countries," Journal of International Money and Finance, Elsevier, vol. 26(2), pages 265-283, March.
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