Capital Mobility and Stabilization Policy Under Fixed and Flexible Exchange Rates

Mundell, Robert A.

doi:10.2307/139336

Cited by 1,847 publications

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“…The authorities liberalized cross-border capital flows while sticking to a fixed exchange rate system and also pursuing an independent monetary policy. This was, of course, the classic Mundell "impossible trinity" (Mundell 1963). Thailand had successfully used a fixed exchange rate system since the end of the Second World War.…”

Section: Short-term Foreign Debt and The 1997-1998 Crisismentioning

confidence: 99%

Prevention and Resolution of Foreign Exchange Crises in East Asia

Sussangkarn¹

2014

Reform of the International Monetary System

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. www.econstor.eu Terms of use: Documents in ADBI Working Paper Series Prevention and Resolution of Foreign Exchange Crises in East Asia Chalongphob SussangkarnNo. 363 June 2012 Asian Development Bank InstituteThe Working Paper series is a continuation of the formerly named Discussion Paper series; the numbering of the papers continued without interruption or change. ADBI's working papers reflect initial ideas on a topic and are posted online for discussion. ADBI encourages readers to post their comments on the main page for each working paper (given in the citation below). Some working papers may develop into other forms of publication. The views expressed in this paper are the views of the author and do not necessarily reflect the views or policies of ADBI, the ADB, its Board of Directors, or the governments they represent. ADBI does not guarantee the accuracy of the data included in this paper and accepts no responsibility for any consequences of their use. Terminology used may not necessarily be consistent with ADB official terms.Asian Development Bank Institute Kasumigaseki Building 8F 3-2-5 Kasumigaseki, Chiyoda-ku Tokyo 100-6008, Japan AbstractThis paper discusses mechanisms to prevent and resolve foreign exchange crises in East Asia. Policies and mechanisms at the country level as well as regional and global levels are discussed. Policies at the level of a particular country to prevent foreign exchange crises include the management of short-term foreign currency liabilities, the adequacy of reserves, and managing episodes of rapid short-term capital inflows. The author discusses the development of regional mechanisms for crisis prevention and resolution in conjunction with the global mechanisms, including the Chiang Mai Initiative (CMI) and the Chiang Mai Initiative Multilateralization (CMIM). The author then suggests how the CMIM can evolve into an integrated crisis prevention and resolution mechanism for East Asia.

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Section: Short-term Foreign Debt and The 1997-1998 Crisismentioning

confidence: 99%

Prevention and Resolution of Foreign Exchange Crises in East Asia

Sussangkarn¹

2014

Reform of the International Monetary System

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“…A maioria dos artigos empíricos sobre modelagem e previsão no mercado cambial está fundamentada nas teorias de paridade, seja em termos do poder de compra ou da taxa de juros, premissas básicas desde os primeiros trabalhos em política monetária, a partir de Mundell (1963). Este artigo faz uso de um arcabouço de apreçamento de ativos associado à paridade coberta da taxa de juros.…”

Section: Referencial Teóricounclassified

Previsão do câmbio real-dólar sob um arcabouço de apreçamento de ativos

Matos¹,

Beviláqua²,

Filho³

2012

Rev. Bras. Econ.

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Este artigo estima via componentes principais uma série temporal para o Fator Estocástico de Desconto contendo informações sobre os retornos de fundos cambiais e de renda fixa operando no Brasil, visando utilizá-lo na modelagem do câmbio nominal mensal Real Brasileiro/Dólar Americano através de um Generalized Autoregressive Conditional Heteroskedasticity-in-Mean (GARCH-M) bivariado. Este exercício empírico baseado na teoria de apreçamento de ativos segue metodologicamente Chong et alii (2002) e Da Costa et alii (2010), sendo possível evidenciar um erro de previsão de 5,27% para depreciação cambial e um acerto do sinal da variação cambial em 57,5% dos meses, durante o período de janeiro de 2000 a dezembro de 2009. Estes resultados sugerem à literatura que não se deve desprezar a variação temporal dos momentos condicionais de segunda ordem.
We use principal components to extract a time series for the Stochastic Discount Factor based on returns on Brazilian mutual funds that invest in fixed-income securities and foreign currency. This factor is then used to model the Brazilian Real/American Dolar Exchange rate using a Bivariate Generalized Autoregressive Conditional Heteroskedasticity-in-Mean (GARCH-M). Our empirical exercise based on asset pricing theory follows the methodology used in Chong, Chung and Ahmad (2002) and Da Costa et alii (2010). Our foreign currency depreciation forecasting error is 5,27% and we are able to say the correct variation sign in 57,5% of the time, during the January 2000 -December 2009 period. These results suggest to the literature that one should not omit the time varying second order conditional moments

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“…Once a country joins a currency union, monetary policies can no longer be tailored to country-specific economic shocks (Mundell 1961(Mundell , 1965.…”

Section: The Modelmentioning

confidence: 99%

External Effects of Currency Unions

Plümper

Troeger

2004

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. We start from a simple Mundellian model, in which currency unions raise economic efficiency but reduce monetary policy autonomy. Our main argument holds that governments in countries that did not join the currency union lose monetary policy autonomy if the establishment of a currency union increases the size of the key currency area. The increase in the size of the key currency area has two external effects on countries remaining outside the currency union: Firstly, it renders stable exchange-rates to the currency union slightly more important, because the value of goods imported from countries within the currency union increases and because the countries inside the union have more synchronized business cycles. Secondly and more importantly, we claim that any given change in the real interest-rate differential leads to an exchange-rate effect, which is larger the smaller the domestic currency area is relative to the key currency area. Consequently, governments in non-member countries have to pay a higher price if they seek to stimulate the domestic economy. Terms of use: Documents inHypotheses: a) Exchange-rate effects on changes in the real interest rate differential are larger, if currency areas are less equal in size. b) Outsider countries more closely follow the interest-rate policy of the currency union than they had previously followed the monetary policy of the anchor currency.

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Capital Mobility and Stabilization Policy Under Fixed and Flexible Exchange Rates

Cited by 1,847 publications

References 1 publication

Prevention and Resolution of Foreign Exchange Crises in East Asia

Prevention and Resolution of Foreign Exchange Crises in East Asia

Previsão do câmbio real-dólar sob um arcabouço de apreçamento de ativos

External Effects of Currency Unions

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