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Hard Pegs versus Intermediate Currency Arrangements in the Pacific

dc.contributor.authorMatthias Helble
dc.contributor.authorAhmad Prasetyo
dc.contributor.authorNaoyuki Yoshino
dc.date.accessioned2019-03-13T14:02:36Z
dc.date.available2019-03-13T14:02:36Z
dc.date.issued2015-04-30
dc.identifier.urihttp://hdl.handle.net/11540/9642
dc.description.abstractThe 14 Pacific developing member countries (DMCs) of the Asian Development Bank (ADB) have opted for very different exchange rate regimes with varying degrees of flexibility. Whereas several microstates have adopted an external currency as their legal tender, others have decided to use a basket currency and yet others have chosen a managed float. The choice of exchange rate regime can have far reaching economic consequences. In this paper, we first build a simple exchange rate model that illustrates how monetary authorities should best determine the weights of the basket currencies in order to keep fluctuations in gross domestic product (GDP) and in exchange rates to a minimum. We add to the literature by explicitly modeling tourism flows. In the second part of the paper we study the recent developments of the Pacific DMCs in terms of the volatility of their exchange rates, their GDP and their balance of trade. We find that Pacific DMCs with external currencies systematically exhibit lower GDP volatility compared to Pacific DMCs with basket currencies or floats. We conclude that Pacific DMCs with basket currencies or floats seem to have managed their exchange rate with the objective to minimize fluctuations of exchange rates, rather than those of their GDP. Our model therefore provides valuable guidance for those monetary authorities in the Pacific that would like to lower GDP fluctuations.
dc.languageEnglish
dc.publisherAsian Development Bank Institute
dc.titleHard Pegs versus Intermediate Currency Arrangements in the Pacific
dc.typeWorking Papers
dc.subject.expertMacroeconomic
dc.subject.expertMacroeconomic Analysis
dc.subject.expertMacroeconomic Framework
dc.subject.expertMacroeconomic Models
dc.subject.expertMacroeconomic Performance
dc.subject.expertMacroeconomic Planning
dc.subject.expertMacroeconomic Policies
dc.subject.expertMacroeconomic Reform
dc.subject.expertMacroeconomic Stabilization
dc.subject.expertResults-Based Monitoring And Evaluation
dc.subject.expertProject Evaluation & Review Technique
dc.subject.expertProject Evaluation
dc.subject.expertProgram Evaluation
dc.subject.expertPerformance Evaluation
dc.subject.expertOperations Evaluation
dc.subject.expertEvaluation Methods
dc.subject.expertEvaluation
dc.subject.adbSocial condition
dc.subject.adbEconomic dependence
dc.subject.adbEconomic assistance
dc.subject.adbInternational monetary relations
dc.subject.adbInternational monetary relations
dc.subject.adbInternational trade
dc.subject.adbNational accounting
dc.subject.adbMarket
dc.subject.adbProject impact
dc.subject.adbDevelopment projects
dc.subject.adbProgram management
dc.subject.adbPerformance appraisal
dc.subject.adbProject appraisal
dc.subject.adbTechnology assessment
dc.subject.adbEconomic indicators
dc.subject.adbGrowth models
dc.subject.adbGross domestic product
dc.subject.adbMacroeconomics
dc.subject.adbEconomic forecast
dc.subject.adbExports
dc.subject.naturalExports
dc.subject.naturalExchange
dc.subject.naturalComparative economics
dc.subject.naturalIndex number
dc.subject.naturalMonetary policy
dc.subject.naturalValue analysis
dc.subject.naturalAdjustment cost
dc.subject.naturalTransaction cost
dc.subject.naturalConditionality
dc.subject.naturalInternational relations
dc.subject.naturalCumulative effects assessment
dc.subject.naturalGrievance procedures
dc.subject.naturalParticipatory monitoring and evaluation
dc.subject.naturalExchange rate
dc.subject.naturalEconomic development projects
dc.subject.naturalEconomic policy
dc.subject.naturalEconomic forecasting
dc.subject.naturalExchange rates
dc.title.seriesADBI Working Paper Series
dc.title.volumeNo. 524
dc.contributor.imprintAsian Development Bank Institute
oar.themeEconomics
oar.themeEvaluation
oar.adminregionAsia and the Pacific Region
oar.countryBangladesh
oar.countryBhutan
oar.countryIndia
oar.countryMaldives
oar.countryNepal
oar.countrySri Lanka
oar.countryBrunei Darussalam
oar.countryCambodia
oar.countryIndonesia
oar.countryLao People's Democratic
oar.countryMalaysia
oar.countryMyanmar
oar.countryPhilippines
oar.countrySingapore
oar.countryThailand
oar.countryViet Nam
oar.countryCook Islands
oar.countryFiji Islands
oar.countryKiribati
oar.countryMarshall Islands
oar.countryFederated States of Micronesia
oar.countryNauru
oar.countryPalau
oar.countryPapua New Guinea
oar.countrySamoa
oar.countrySolomon Islands
oar.countryTimor-Leste
oar.countryTonga
oar.countryTuvalu
oar.countryVanuatu
oar.countryAfghanistan
oar.countryArmenia
oar.countryAzerbaijan
oar.countryGeorgia
oar.countryKazakhstan
oar.countryKyrgyz Republic
oar.countryPakistan
oar.countryTajikistan
oar.countryTurkmenistan
oar.countryUzbekistan
oar.countryPeople's Republic of China
oar.countryHong Kong
oar.countryChina
oar.countryRepublic of Korea
oar.countryMongolia
oar.countryTaipei,China
oar.identifierOAR-009261
oar.authorHelble, Matthias
oar.authorPrasetyo, Ahmad
oar.authorYoshino, Naoyuki
oar.importTRUE
oar.googlescholar.linkpresenttrue


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  • ADBI Working Papers
    The Asian Development Bank Institute (ADBI) Working Paper series is a continuation of the formerly named Discussion Paper series which began in January 2003. The numbering of the papers continued without interruption or change. ADBI was established in 1997 in Tokyo, Japan, to help build capacity, skills, and knowledge related to poverty reduction and other areas that support long-term growth and competitiveness in developing economies in Asia and the Pacific.

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