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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 exibility in 11 Asian countries. Asia has made slow progress on de jure capital account openness, but has made much more progress on de facto capital account openness. While there is a slow pace of increase in exchange rate exibility, most Asian countries continue to have largely inexible exchange rates. This combination { of moving forward with de facto capital account integration without bringing in exchange rate exibility { has lead to procyclicality of monetary policy when capital ows are procyclical. The paper emphasises the case for a consistent monetary policy framework.

Keywords: capital account openness; impossible trinity; exchange rate (search for similar items in EconPapers)
JEL-codes: E42 E52 E58 E61 (search for similar items in EconPapers)
Date: 2010-01
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Related works:
Chapter: Asia Confronts the Impossible Trinity (2012) Downloads
Working Paper: Asia Confronts the Impossible Trinity (2010) Downloads
Working Paper: Asia Confronts the Impossible Trinity (2010) Downloads
Working Paper: Asia confronts the impossible trinity (2010) Downloads
Working Paper: Asia Confronts the Impossible Trinity (2010) Downloads
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