Capital Flows and Real Exchange Rate Behavior: Evidence from Pre-Crises ASEAN Economies

Shibeshi Ghebre Kahsay and Jagdish Handa
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Shibeshi Ghebre Kahsay: Abu Dhabi Women's College, UAE
Jagdish Handa: McGill University, Canada

Chapter 3 in Studies in East Asian Economies:Capital Flows, Exchange Rates and Monetary Policy, 2011, pp 53-139 from World Scientific Publishing Co. Pte. Ltd.

Abstract: AbstractThis chapter develops a three-good model for the internal real exchange rate to identify the fundamental determinants of the internal real exchange rates for exports and imports. The examination of the time series properties of the variables suggests that the internal real exchange rates in the ASEAN-4 countries were indeed driven by the fundamentals derived from our model. The data support the absence of misalignment between the actual and equilibrium real exchange rates and suggests that the movements in the actual real exchange rates were equilibrium responses to changes in their fundamental determinants.

Keywords: International Capital Mobility; Monetary Policy; Exchange Rates; Economic Growth; Taylor Rule; East Asian Economies; China (search for similar items in EconPapers)
Date: 2011
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