Current Account Imbalance and Exchange Rate Flexibility
Kim, Kyunghun | January 2017
The US has been addressing the current account imbalance issue over the past few decades. To tackle this issue, international organizations such as the IMF and the G20 have called for greater exchange rate flexibility. Korea is currently on the monitoring list of currency manipulators, along with China, Japan, Germany, Taiwan and Switzerland based on the Bennet-Hatch-Carper amendment. Korea's export growth has continued to decline over the past few years, and the contribution of export to economic growth has been going down the same path. If the new US administration intensifies political and economic pressures on exchange rate manipulation issues, this will serve as an additional downward pressure on Korea's export growth rate and economic growth rate. We no longer stall in determining our stance toward exchange rate flexibility, with regard to the global current account imbalance. To that end, we would like to ask: does a flexible exchange rate facilitate current account adjustment?
CitationKim, Kyunghun. 2017. Current Account Imbalance and Exchange Rate Flexibility. © Korea Institute for International Economic Policy. http://hdl.handle.net/11540/10559.
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