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    Dynamic Shift to a Basket-Peg or Floating Regime in East Asian Countries in Response to the People’s Republic of China’s Transition to a New Exchange Rate Regime

    Yoshino, Naoyuki; Kaji, Sahoko; Asonuma, Tamon | February 2015
    Abstract
    This paper analyzes a desirable transition path for East Asian countries given the People’s Republic of China’s (PRC’s) transition to a new exchange rate regime. It attempts to answer two main questions: (i) Would these countries be better off shifting to either a basket peg or a floating regime following the PRC’s transition to a basket peg regime? (ii) How and when should these countries shift to the desired regime? The paper captures the influence of the PRC’s predetermined shift in its exchange rate regime on East Asian countries’ decisions regarding their optimal transition policies based on a dynamic stochastic general equilibrium (DSGE) model of a small open economy. Our calibration exercise using Malaysian and Singapore data from the first quarter (Q1) of 2000 to Q4 2012 reveals that a gradual adjustment to a basket peg is the most desirable policy for both countries. A sudden shift to a basket peg is superior to maintaining a dollar peg in Malaysia, but not in Singapore. Finally, a sudden shift to a floating regime is even worse than maintaining a dollar peg in both countries.
    Citation
    Yoshino, Naoyuki; Kaji, Sahoko; Asonuma, Tamon. 2015. Dynamic Shift to a Basket-Peg or Floating Regime in East Asian Countries in Response to the People’s Republic of China’s Transition to a New Exchange Rate Regime. © Asian Development Bank Institute. http://hdl.handle.net/11540/9632.
    Keywords
    Macroeconomic
    Macroeconomic Analysis
    Macroeconomic Framework
    Macroeconomic Models
    Macroeconomic Performance
    Macroeconomic Planning
    Macroeconomic Policies
    Macroeconomic Reform
    Macroeconomic Stabilization
    Results-Based Monitoring And Evaluation
    Project Evaluation & Review Technique
    Project Evaluation
    Program Evaluation
    Performance Evaluation
    Operations Evaluation
    Evaluation Methods
    Evaluation
    Social condition
    Economic dependence
    Economic assistance
    International monetary relations
    International monetary relations
    International trade
    National accounting
    Market
    Project impact
    Development projects
    Program management
    Performance appraisal
    Project appraisal
    Technology assessment
    Economic indicators
    Growth models
    Gross domestic product
    Macroeconomics
    Economic forecast
    Exports
    Exports
    Exchange
    Comparative economics
    Index number
    Monetary policy
    Value analysis
    Adjustment cost
    Transaction cost
    Conditionality
    International relations
    Cumulative effects assessment
    Grievance procedures
    Participatory monitoring and evaluation
    Exchange rate
    Economic development projects
    Economic policy
    Economic forecasting
    Exchange rates
    Show allCollapse
    Citable URI
    http://hdl.handle.net/11540/9632
    Metadata
    Show full item record
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    adbi-wp514.pdf (796.3Kb)
    Author
    Yoshino, Naoyuki
    Kaji, Sahoko
    Asonuma, Tamon
    Theme
    Economics
    Evaluation

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    Copyright 2016-2021 Asian Development Bank Institute, except as explicitly marked otherwise