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The exchange rate regime in Asia: From crisis to crisis

Ila Patnaik (), Ajay Shah (), Anmol Sethy and Vimal Balasubramaniam ()
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Ila Patnaik: National Institute of Public Finance and Policy
Anmol Sethy: National Institute of Public Finance and Policy

Working Papers from National Institute of Public Finance and Policy

Abstract: Prior to the Asian financial crisis, most Asian exchange rates were de facto pegged to the US Dollar. In the crisis, many economies experienced a brief period of extreme flexibility. A `fear of floating' gave reduced flexibility when the crisis subsided, but flexibility after the crisis was greater than that seen prior to the crisis. Contrary to the idea of a durable Bretton Woods II arrangement, Asia then went on to slowly raise flexibility and reduce the role for the US Dollar. When the period from April 2008 to December 2009 is compared against periods of high in flexibility, from January 1991 to November 1991 and October 1995 to March 1997, the increase in flexibility is economically and statistically significant. This paper proposes a new measure of dollar pegging, the "Bretton Woods II score". We find that by this measure Asia has been slowly moving away from a Bretton Woods II arrangement.

Keywords: Exchange rate regime; Asia; Bretton Woods II hypothesis (search for similar items in EconPapers)
JEL-codes: F31 F33 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-ifn, nep-mon and nep-sea
Date: 2010-05
Note: Working Paper 69, 2010
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Journal Article: The exchange rate regime in Asia: From crisis to crisis (2011) Downloads
Working Paper: The exchange rate regime in Asia: From Crisis to Crisis (2010) Downloads
Working Paper: The Exchange Rate Regime in Asia: From Crisis to Crisis (2010) Downloads
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