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International Capital Markets, Macroeconomic Stability, and Exchange Rate Stabilization in the CIS and East Asia

Author

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  • Gunther Schnabl

    (Tuebingen University)

Abstract

Although most CIS and East Asian countries are de jure classified as free floaters, they de facto pursue (tight) dollar pegs. This paper emphasizes dollar denomination of short-term and long-term payment flows as reasons for exchange rate stabilization. Based on the analysis of ifcompetitive depreciationsll and incompetitive appreciationsll among the CIS and East Asian currencies it is argued that the adherence to a common external anchor currency enhances macroeconomic stability. Finally, the potential of euro and ruble (CIS) as well as yen and yuan (East Asia) to challenge the dollar as anchor currencies in the respective regions is

Suggested Citation

  • Gunther Schnabl, 2004. "International Capital Markets, Macroeconomic Stability, and Exchange Rate Stabilization in the CIS and East Asia," International Finance 0410009, University Library of Munich, Germany, revised 01 Mar 2005.
  • Handle: RePEc:wpa:wuwpif:0410009
    Note: Type of Document - pdf; pages: 29
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    References listed on IDEAS

    as
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    2. Guillermo A. Calvo & Carmen M. Reinhart, 2002. "Fear of Floating," The Quarterly Journal of Economics, Oxford University Press, vol. 117(2), pages 379-408.
    3. Gunther Schnabl, 2004. "De jure versus de facto Exchange Rate Stabilization in Central and Eastern Europe," Aussenwirtschaft, University of St. Gallen, School of Economics and Political Science, Swiss Institute for International Economics and Applied Economics Research, vol. 59(02), pages 171-190, June.
    4. Jeffrey A. Frankel, 1999. "No Single Currency Regime is Right for All Countries or At All Times," NBER Working Papers 7338, National Bureau of Economic Research, Inc.
    5. Ronald McKinnon & Gunther Schnabl, 2004. "The Return to Soft Dollar Pegging in East Asia: Mitigating Conflicted Virtue," International Finance, Wiley Blackwell, vol. 7(2), pages 169-201, July.
    6. Andrew Berg & Eduardo Borensztein, 2000. "The Choice of Exchange Rate Regime and Monetary Target in Highly Dollarized Economies," Journal of Applied Economics, Taylor & Francis Journals, vol. 3(2), pages 285-324, November.
    7. Eric Hillebrand & Gunther Schnabl, 2003. "The Effects of Japanese Foreign Exchange Intervention: GARCH Estimation and Change Point Detection," Departmental Working Papers 2003-09, Department of Economics, Louisiana State University.
    8. Levy-Yeyati, Eduardo & Sturzenegger, Federico, 2005. "Classifying exchange rate regimes: Deeds vs. words," European Economic Review, Elsevier, vol. 49(6), pages 1603-1635, August.
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    10. Barry Eichengreen & Ricardo Hausmann, 1999. "Exchange rates and financial fragility," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 329-368.
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    12. Mr. Peter M Keller & Mr. Thomas J Richardson, 2003. "Nominal Anchors in the CIS," IMF Working Papers 2003/179, International Monetary Fund.
    13. Nienke Oomes, 2003. "Network Externalities and Dollarization Hysteresis: The Case of Russia," IMF Working Papers 2003/096, International Monetary Fund.
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    Cited by:

    1. Dreger, Christian & Fidrmuc, Jarko, 2011. "Drivers of Exchange Rate Dynamics in Selected CIS Countries: Evidence from a Factor-Augmented Vector Autoregressive (FAVAR) Analysis," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, pages 49-58.
    2. Schnabl, Gunther, 2005. "International Capital Markets and Informal Dollar Standards in the CIS and East Asia," Discussion Paper Series 26192, Hamburg Institute of International Economics.
    3. Agnieszka Markiewicz, 2006. "How Central and Eastern European Countries Choose Exchange Rate Regimes," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue 2, pages 69-84.

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    More about this item

    Keywords

    CIS; East Asia; Informal Dollar Standard; Liability Dollarization; Asset Dollarization; Competitive Depreciation; Competitive Appreciation; Exchange Rate Systems;
    All these keywords.

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements

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