The Stability of Currency Systems in East Asia --Quantitative Analysis Using a Multi-Country Macro-Econometric Model--
The purpose of this paper is to examine the stability of East Asian financial and currency systems, using the multi-country macro-econometric model constructed by Kamada and Takagawa (2005) to depict economic interdependence in the Asian-Pacific region. The highly-developed system of the international production network in the East Asian region was not only the driving force behind the "East Asian miracle," but also, as seen in the "Asian currency crisis," worked as a platform whereby local economic crises immediately spread across countries. Economic interdependence in East Asia creates policy interdependence, whereby policy judgments in one country also affect the economies of other countries, and moreover, are fed back to the economy of the original country. After the currency crisis, several East Asian economies implemented reforms of their currency systems. In doing so, the chief concern of policymakers is thought to have been the problems of how to prevent a recurrence of the currency crisis and how to protect their own economies from currency crises occurring in other countries. Now that international safety nets such as the Chiang Mai Initiative are being cast over East Asia, the importance of currency crisis shocks is expected to become relatively small. Moreover, the economic situation in East Asia is changing, as observed in the rise of the Chinese economy and structural changes in the US and Japan. Therefore, systems designed on the basis of the current economic situation may not necessarily be maintained in their existing form. In this paper, the author carefully studies whether or not shifting from existing policy regimes to alternative policy regimes in nine East Asian countries or regions (Indonesia, Singapore, Thailand, the Philippines, Malaysia, South Korea, Hong Kong, Taiwan and China) is effective in increasing economic stability in their own countries against various economic shocks. As a result of the analysis, it is suggested that the existing currency system in East Asia is not necessarily stable and is likely to undergo further transformations in the future.
Volume (Year): 5 (2009)
Issue (Month): 1 (October)
|Contact details of provider:|| Web page: http://www.mof.go.jp/pri/|
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Jeffrey A. Frankel & Shang-Jin Wei, 1994.
"Yen Bloc or Dollar Bloc? Exchange Rate Policies of the East Asian Economies,"
in: Macroeconomic Linkage: Savings, Exchange Rates, and Capital Flows, NBER-EASE Volume 3, pages 295-333
National Bureau of Economic Research, Inc.
- Wei, S.J. & Frankel, J.A., 1992. "Yen Bloc or Dollar Bloc: Exchange Rate Policies of the East Asian Economies," Papers 92-08, University of Birmingham - International Financial Group.
- Jeffrey A. Frankel & Shang-Jin Wei, 1992. "Yen bloc or dollar bloc: exchange rate policies of the East Asian economies," Pacific Basin Working Paper Series 93-01, Federal Reserve Bank of San Francisco.
- Koichiro Kamada & Izumi Takagawa, 2005.
"Policy Coordination in East Asia and across the Pacific,"
Hi-Stat Discussion Paper Series
d05-101, Institute of Economic Research, Hitotsubashi University.
- Koichiro Kamada & Izumi Takagawa, 2005. "Policy coordination in East Asia and across the Pacific," International Economics and Economic Policy, Springer, vol. 2(4), pages 275-306, December.
- Koichiro Kamada & Izumi Takagawa, 2005. "Policy Coordination in East Asia and across the Pacific," Bank of Japan Working Paper Series 05-E-4, Bank of Japan.
- Goldstein, Morris & Khan, Mohsin S., 1985. "Income and price effects in foreign trade," Handbook of International Economics, in: R. W. Jones & P. B. Kenen (ed.), Handbook of International Economics, edition 1, volume 2, chapter 20, pages 1041-1105 Elsevier.
- Kamada, Koichiro, 2004.
"Real-Time Estimation of the Output Gap in Japan and its Usefulness for Inflation Forecasting and Policymaking,"
Discussion Paper Series 1: Economic Studies
2004,14, Deutsche Bundesbank, Research Centre.
- Kamada, Koichiro, 2005. "Real-time estimation of the output gap in Japan and its usefulness for inflation forecasting and policymaking," The North American Journal of Economics and Finance, Elsevier, vol. 16(3), pages 309-332, December.
- Koichiro Kamada & Ko Nakayama & Izumi Takagawa, 2002. "Deepening Interdependence in the Asia-Pacific Region: An Empirical Study Using a Macro-Econometric Model," Bank of Japan Working Paper Series Research and Statistics D, Bank of Japan.
- Kawai, Masahiro, 2002. "Exchange Rate Arrangements in East Asia: Lessons from the 1997-98 Currency Crisis," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, vol. 20(S1), pages 167-204, December.
When requesting a correction, please mention this item's handle: RePEc:mof:journl:ppr005f. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Policy Research Institute)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.