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Dynamic Analysis of Exchange Rate Regimes : Policy Implications for Emerging Countries in Asia

Author

Listed:
  • Naoyuki Yoshino

    (Asian Development Bank Institute (ADBI))

  • Sahoko Kaji
  • Tamon Asonuma

Abstract

This paper discusses desirable exchange rate regimes and how countries can shift from their current regimes to these regimes over the medium term. We demonstrate the superiority of a basket-peg regime with the basket weight rule over a floating regime with the interest rate rule or the money supply rule in small open economies, during periods when volatility of exchange rates is moderate. Countries which currently have fixed exchange rates would be better moving toward either a basket-peg or a floating regime over the medium term. A shift to a basket-peg regime is preferred when exchange rate fluctuations are large.

Suggested Citation

  • Naoyuki Yoshino & Sahoko Kaji & Tamon Asonuma, 2014. "Dynamic Analysis of Exchange Rate Regimes : Policy Implications for Emerging Countries in Asia," Finance Working Papers 24519, East Asian Bureau of Economic Research.
    • Handle: RePEc:eab:financ:24519
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    Cited by:

    1. Lord, Montague, 2015. "Regional Economic Integration in Central Asia and South Asia," MPRA Paper 66436, University Library of Munich, Germany.
    2. repec:uii:journl:v:9:y:2017:i:1:p:98-103 is not listed on IDEAS

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    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission

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