Post-Crisis Exchange Rate Policy in Five Asian Countries: Filling in the Â“Hollow MiddleÂ”?
Following the 1997Â–98 financial turmoil, crisis countries in Asia moved toward either floating or fixed exchange rate systems, superficially consistent with the bipolar view of exchange rate regimes and the Â“hollow middleÂ” hypothesis. But some observers have claimed that, despite the changes in their de jure exchange rate regimes, the crisis countriesÂ’ policies have de facto been very similar in the post- and pre-crisis periods. This paper analyzes the evidence and concludes that, except for Malaysia, which adopted a hard peg and imposed capital controls, the other crisis countries are floating more than before, though less than Â“realÂ” floaters do. The intermediate exchange rate policies pursued by most of the crisis countries during the post-crisis can be justified on second-best arguments.
|Date of creation:||Oct 2001|
|Publication status:||published in Journal of the Japanese and International Economies, September 2003, v. 17, iss. 3, pp. 336-69|
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