Are the East Asian Currencies still Misaligned? An Analysis Based on Absolute PPP-Income Relationship using Panel Data

Taizo Motonishi

Macroeconomics Working Papers from East Asian Bureau of Economic Research

Abstract: Over 10 years after the currency crisis, the degree of exchange rate misalignment is still an issue of contention for East Asian countries. This study evaluates the degrees of currency misalignment of Korea, China, Malaysia, Thailand, the Phillipines, and Indonesia by examining absolute purchasing power parity (PPP)-income relationships using panel data. The distinction between local currency misalignments and the US dollar misalignment is stressed. The estimated misalignments in 2007 were 22.4 per cent overvaluation for the Indonesian rupiah, 12.5 per cent overvaluation for the Philippine peso, and 15.6 per cent undervaluation for the Malaysian ringgit.

Keywords: currency; ppp-income; panel data (search for similar items in EconPapers)
JEL-codes: E00 E58 F31 (search for similar items in EconPapers)
Date: 2009-01
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Working Paper: Are the East Asian Currencies still Misaligned? An analysis based on absolute PPP-Income relationship using panel data (2009)
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