Changes in misalignment of the Korean won: Towards a flexible exchange rate regime

Gab-Je Jo ()

Global Economic Review, 2004, vol. 33, issue 1, 69-83

Abstract: This paper investigates whether the adoption of a more floating exchange rate regime with inflation targeting has improved the vulnerability of the exchange rate, by looking at the Korean case. Using the NATREX model, I estimate the equilibrium real exchange rate of the Won and its misalignment. The unit-root test for misalignment and the unrestrictive vector autoregressive (VAR) impulse response function test show that under a more flexible exchange rate regime, the vulnerability of the exchange rate regime to external shocks has declined.

Keywords: exchange rate system; equilibrium real exchange rate; inflation targeting; exchange rate vulnerability; external shocks (search for similar items in EconPapers)
Date: 2004
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DOI: 10.1080/12265080408449842

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