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– The purpose of this paper is to analyze the “following” behavior of six currencies in East Asia to RMB before and after the “financial crisis”.
The purpose of this paper is to analyze the “following” behavior of six currencies in East Asia to RMB before and after the “financial crisis”.
Using foreign exchange spot rate data from 2005 to 2013, the authors investigate the dynamic relationship of RMB and six East Asia currencies with method of DCC-GARCH and quantile regression.
The authors get such conclusions: first, most currencies indeed “follow” RMB in whole sample period but the correlation is “time-varying”; second, the degree of co-movement increased as a whole, which reflects that the influence of China in East Asia rose continuously; third, the East Asian currencies behaved differently before the crisis, but reveal some similarities after the crisis, and prefer to “follow” when RMB depreciates and reluctant to follow when RMB appreciates at a comparatively large degree. The authors argue that it may be related to the different macroeconomic environment faced by East Asia region before and after the crisis, the rising economic influence of China and the development of RMB internationalization’s practice.
The effort could strength the understanding to the “following” behavior of East Asia currencies to RMB, the authors also point out that RMB has been as regional currency anchor, but the role of anchor is unstable, and is affected by international economic circumstance, China should adapt some methods to strength RMB’s influence to East Asia currency.
The Asian Monetary Fund, proposed during the 1997–1998 Asian Financial Crisis, was an attempt by East Asian nations to develop collective policy responses to financial…
The Asian Monetary Fund, proposed during the 1997–1998 Asian Financial Crisis, was an attempt by East Asian nations to develop collective policy responses to financial crises and provide rapid distribution of emergency funding. It was envisaged that policy prescriptions would exhibit greater regional sensitivity and prevent contagion. The proposal was rejected because of the perceived perpetuation of moral hazard, duplication and conflict with the International Monetary Fund and belief that historical disunity would prevent successful collaboration. This paper advocates, in the context of international financial architecture reform, enhanced East Asian regionalism is crucial to prevent and manage future financial crises.
The purpose of this paper is to explain the reasons and development trend of the new round of restructuring of regional division of labor in East Asia after the global…
The purpose of this paper is to explain the reasons and development trend of the new round of restructuring of regional division of labor in East Asia after the global financial crisis and the role of China in the process.
The paper probes into four factors leading to the adjustment of regional division of labor in East Asia before analyzing its development trend trough comparing the change of roles of China and ASEAN in the process.
After the flying-geese division and regional production network, East Asia’s regional division of labor is getting a new round of structural adjustment. The analysis of this paper shows that this adjustment is mainly due to global financial crisis, post-crisis de-globalization, the rebalancing of East Asian economies and China’s economic transformation. From the adjustment direction, the main trend is ASEAN gradually replacing China to become the new assembly plant area, while China becomes a new manufacturing power by its rising status in the global value chain.
The paper describes the development trend of the new round of restructuring of regional division of labor in East Asia in the future and gives the policy implications for the East Asian countries.
We investigate fluctuations in the nominal effective exchange rates (NEERs) of East Asian currencies and the Asian monetary unit (AMU), which is computed as a weighted…
We investigate fluctuations in the nominal effective exchange rates (NEERs) of East Asian currencies and the Asian monetary unit (AMU), which is computed as a weighted average of East Asian currencies during the global financial crisis. We find that NEERs were more stable for countries that continued to follow a currency basket system during the global financial crisis.
Furthermore, we investigate the relationships among NEERs, AMU, and AMU deviation indicators, which indicate the extent of the deviation in the exchange rate of each East Asian currency from a benchmark rate given in terms of the AMU. By comparing NEERs with a combination of AMU and AMU deviation indicators, we find that there is a strong relationship between them, both before and after the global financial crisis. These results indicate that a coordinated exchange rate policy aimed at stabilizing the AMU deviation indicators will be effective in stabilizing the NEERs of East Asian currencies. In this respect, the AMU deviation indicators, which indicate intraregional exchange rates among East Asian currencies, play a crucial role.
Because NEER trade weights are widely similar among East Asian currencies, a policy aimed at stabilizing a home currency against its NEER may lead to a coordinated exchange rate policy without a common consensus among East Asian countries. In the future, however, coordinated monetary policies should be considered along with coordinated exchange rate policies.
- Asian monetary unit (AMU)
- AMU deviation indicator
- de facto US dollar peg system
- currency basket system
- nominal effective exchange rate (NEER)
- coordinated exchange rate policy
- the Chiang Mai Initiative
- trade weight
- GDP measured at PPP
- European currency unit (ECU)
- implicit basket weights
- currency regime
- European monetary system (EMS)
Post-crisis policy measures in Asia have focussed on banking sector and market reform. The paper argues that in order to propel growth, banking and market reform in Asia…
Post-crisis policy measures in Asia have focussed on banking sector and market reform. The paper argues that in order to propel growth, banking and market reform in Asia must be undertaken with the view that they are not mutually exclusive competitive tradeoffs. Rather banks and markets must be viewed as complementary supportive pillars in a financial system. Additionally, legal and functional reform must be undertaken simultaneously. The paper proposes that a likely consequence of doing so will enable creating a four-pillared multi-dimensional growth paradigm in the region to help restore and promote growth.
This paper discusses Rethinking the East Asian Miracle, a collection of 13 essays on a wide spectrum of issues, ranging from the causes of the East Asian crisis and possibilities of recovery to the strengths and weaknesses in the technical, financial and governance structures of the East Asian economies.
This paper identifies the new economic force regenerating the East Asian economies in the post‐crisis era. Based on the convergence of five main economic indexes, it…
This paper identifies the new economic force regenerating the East Asian economies in the post‐crisis era. Based on the convergence of five main economic indexes, it reclassifies the ten East Asian entities into four tiers, and highlights the language similarities among the tiers. It also discusses the inter‐ and intra‐regional economic dynamics, and the implications on further regional trade/investment, financial cooperation and monetary integration, such as a possible unifying Asian currency.
This paper aims to distill from both the Asian “miracle” and the “meltdown” since the Asian crisis, a generic East Asian business model which is changing in the context of globalisation, information communication technology, knowledge‐based economy, deregulation and emerging new competition.
The generic business model considers the creative and innovative nature of intellectual capital in a qualitative macroeconomic development model rather than a quantitative or econometric micro‐level business modeling for the firm or industry. Diverse and heterogeneous both within the whole of East Asia and distinguished as Northeast and Southeast Asia, the putative generic business model is further differentiated in terms of customised idiosyncratic models in more mature Northeast developmental states in Japan, Korea and Taiwan contrasted with Southeast “captured” developmental states as in Indonesia and Malaysia entrapped by ethnic politics.
City‐states Hong Kong and Singapore are exceptional because of their size and resultant globalised states. To each its own may be the conclusion in terms of customised national systems and models, but East Asian ethical and moral dimensions of integrity may generally offer a version moral capitalism of which is suited to global capitalism not of the brute Darwinist kind. In the final analysis, East Asia is increasingly exposed to the global marketplace, competition and globalisation backlash, such that some common denominator comes from DFI and MNCs from multicultural political economy dimensions.
The paper presents a putative East Asian business models.
Gives and overview of the East Asian financial crisis, focusing on the seven countries most directly involved, and the underlying reasons for its magnitude. Examines the…
Gives and overview of the East Asian financial crisis, focusing on the seven countries most directly involved, and the underlying reasons for its magnitude. Examines the 1991‐1999 economic growth rates, inflation rates and current account positions in the area and asserts that the deterioration of macroeconomic fundamentals was insufficient to explain it. Relates a number of external factors in the crisis to some research models and argues that the poor regulation and control of the banking system, coupled with an inflow of foreign investment, which investors wrongly believed to be government guaranteed, caused a “bubble” in share and property prices. Describes the collapse of companies, currency values and share/property prices which followed, exacerbated by a panicky withdrawal of foreign funds, speculative activity and government policy errors. Lists the objectives of and instruments used by the IMF programme and asks if it was too harsh e.g. on bank closures. Considers the lessons of the crisis and its implications for the Basle capital adequacy rules and the imposition of capital controls.
This chapter examines exchange rate options for East Asian countries, taking into account their real economic linkages as well as their international financial relations…
This chapter examines exchange rate options for East Asian countries, taking into account their real economic linkages as well as their international financial relations. Particular consideration is given to possible exchange rate cooperation within the region. For this purpose, the literature on the optimal peg is reconsidered and subsequently extended to include a country's international financial asset and liability situation. That is, instead of focusing solely on nominal or real effective exchange rates, the chapter proposes a blend of “real” and “financial” exchange rates for analyzing “optimal” exchange rate policy.