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Designing Appropriate Exchange Rate Regimes for East Asia: Inflation Targeting and Monetary Policy Rules

Author

Listed:
  • Tony Cavoli

    () (School of Economics, University of Adelaide, Australia)

  • Ramkishen Rajan

    () (School of Economics, University of Adelaide, Australia)

Abstract

While favoring relatively more flexible regimes, emerging economies in East Asia and elsewhere appear to heavily manage their currencies despite being officially described as “floaters”. In other words, revealed preferences of regional monetary authorities appear to indicate a high degree of “fear of floating”. The paper first explores the reasons for this fear of floating. It then goes on to examine the case for and operational mechanics behind an open inflation targeting regime which has increasingly been advocated for small and open economies in East Asia and elsewhere. The paper also attempts a reconciliation between the discussion of analytics behind open economy inflation targeting and its implications for exchange rate design, on the one hand, and actual exchange rate ongoings in East Asia, on the other.

Suggested Citation

  • Tony Cavoli & Ramkishen Rajan, 2003. "Designing Appropriate Exchange Rate Regimes for East Asia: Inflation Targeting and Monetary Policy Rules," Centre for International Economic Studies Working Papers 2003-09, University of Adelaide, Centre for International Economic Studies.
  • Handle: RePEc:adl:cieswp:2003-09
    as

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    File URL: http://www.adelaide.edu.au/cies/papers/0309.pdf
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    References listed on IDEAS

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    Cited by:

    1. Tony Cavoli & Ramkishen Rajan, 2003. "Exchange Rate Arrangements for East Asia Post-Crisis: Examining the Case for Open Economy Inflation Targeting," Centre for International Economic Studies Working Papers 2003-10, University of Adelaide, Centre for International Economic Studies.
    2. Siok Kun, Sek, 2009. "The impacts of economic structures on the performance of simple policy rules in a small open economy," MPRA Paper 25065, University Library of Munich, Germany.
    3. Reza Siregar & Ramkishen Rajan, 2004. "Exchange Rate Policy and Reserve Management in Indonesia in the Context of East Asian Monetary Regionalism," Centre for International Economic Studies Working Papers 2004-03, University of Adelaide, Centre for International Economic Studies.

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