Monetary Policy in East Asia: Common Concerns
The paper identifies and evaluates consequences for monetary policy of five features of East Asian development: export orientation, integrated regional trade, bank-dependent finance, the potential for persistent trade surpluses, and the aggressive accumulation of international reserves. The case for a flexible exchange rate is made in terms of the New Neoclassical Synthesis (NNS). NNS logic indicates why fluctuations in "export optimism" create problems for the sustainability of a fixed exchange rate. Cooperative credit policy in East Asia is discussed by analogy to a credit union. The paper outlines problems for monetary policy created by bank-dependent finance in East Asia. A two- country NNS model indicates that a revaluation of the RMB against the dollar is likely to exert little effect on the US trade deficit, although it should help control inflation in China. The paper argues that China can adopt a flexible exchange rate in a few years with modest reforms of its banking system. Finally, the paper considers various reasons for the accumulation of international reserves in East Asia.
|Date of creation:||Sep 2007|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.imes.boj.or.jp/
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.:
- Patrick Higgins & Owen F. Humpage, 2005. "The Chinese renminbi: what’s real, what’s not," Economic Commentary, Federal Reserve Bank of Cleveland, issue Aug.
- Enrique Alberola & José María Serena, 2007. "Global financial integration, monetary policy and reserve accumulation. Assessing the limits in emerging economies," Banco de Espa�a Working Papers 0706, Banco de Espa�a.
- Matthew Higgins & Thomas Klitgaard, 2004. "Reserve accumulation: implications for global capital flows and financial markets," Current Issues in Economics and Finance, Federal Reserve Bank of New York, vol. 10(Sep).
- Goodfriend, Marvin & McDermott, John, 1998.
"Industrial Development and the Convergence Question,"
American Economic Review,
American Economic Association, vol. 88(5), pages 1277-89, December.
- Marvin Goodfriend & John McDermott, 1999. "Industrial development and the convergence question," Working Paper 99-01, Federal Reserve Bank of Richmond.
- Hiroshi Fujiki & nd Akiko Terada-Hagiwara, 2007.
"Financial Integration in East Asia,"
IMES Discussion Paper Series
07-E-12, Institute for Monetary and Economic Studies, Bank of Japan.
- Michael B. Devereux & Hans Genberg, 2006.
"Currency Appreciation and Current Account Adjustment,"
172006, Hong Kong Institute for Monetary Research.
- Devereux, Michael B. & Genberg, Hans, 2007. "Currency appreciation and current account adjustment," Journal of International Money and Finance, Elsevier, vol. 26(4), pages 570-586, June.
- Hans Genberg, 2006.
"Exchange-Rate Arrangements and Financial Integration in East Asia: On a Collision Course?,"
41, Bank of Greece.
- Hans Genberg, 2006. "Exchange-rate arrangements and financial integration in East Asia: on a collision course?," International Economics and Economic Policy, Springer, vol. 3(3), pages 359-377, December.
- Hans Genberg, 2006. "Exchange-Rate Arrangements and Financial Integration in East Asia: On a Collision Course?," Working Papers 152006, Hong Kong Institute for Monetary Research.
- Hans Genberg, 2006. "Exchange-Rate Arrangements an Financial Integration in East Asia: On a Collision Course?," Working Papers 122, Oesterreichische Nationalbank (Austrian Central Bank).
- Marvin Goodfriend & Eswar Prasad, 2007.
"A Framework for Independent Monetary Policy in China,"
CESifo Economic Studies,
CESifo, vol. 53(1), pages 2-41, March.
- Marvin Goodfriend & Eswar Prasad, 2009. "A Framework for Independent Monetary Policy in China," Chapters, in: Monetary Policy Frameworks for Emerging Markets, chapter 8 Edward Elgar.
- Marvin Goodfriend & Eswar Prasad, 2006. "A Framework for Independent Monetary Policy in China," IMF Working Papers 06/111, International Monetary Fund.
When requesting a correction, please mention this item's handle: RePEc:ime:imedps:07-e-18. 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: (Kinken)
If references are entirely missing, you can add them using this form.