Asia Confronts the Impossible Trinity

Ila Patnaik and Ajay Shah

Macroeconomics Working Papers from East Asian Bureau of Economic Research

Abstract: In this paper, we examine capital account openness and exchange rate flexibility in 11 Asian economies. Asia has made slow progress in de jure capital account openness, but has made much more progress in de facto capital account openness. While there has been a gradual increase in exchange rate flexibility, most Asian economies continue to have largely inflexible exchange rates. This combination of advancing de facto capital account integration without greater exchange rate flexibility has led to procyclical monetary policy, when capital flows are procyclical. This paper emphasises the need for a consistent monetary policy framework.

Keywords: capital account openness; exchange rate flexibility; Asia; capital account integration; monetary policy (search for similar items in EconPapers)
JEL-codes: E40 E60 F41 (search for similar items in EconPapers)
Date: 2010-01
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Citations: View citations in EconPapers (7)

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Related works:
Chapter: Asia Confronts the Impossible Trinity (2012)
Working Paper: Asia confronts the impossible trinity (2010)
Working Paper: Asia Confronts the Impossible Trinity (2010)
Working Paper: Asia confronts the impossible trinity (2010)
Working Paper: Asia Confronts the Impossible Trinity (2010)
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