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Extent of Exchange Rate Coordination in Asia

Abhijit Sen Gupta

MPRA Paper from University Library of Munich, Germany

Abstract: High level of intra-regional trade and negative spillovers from competitive devaluation make exchange rate coordination extremely desirable in Asia. Employing a hypothetical Asian Currency Unit we evaluate the degree of coordination among Asian currencies. Traditional empirical tests yield little evidence of coordination among real and nominal exchange rates. However, introducing endogenously determined structural breaks to account for changes in exchange rate regimes provides more mixed evidence. While there is still little evidence for coordination in nominal terms, some degree of coordination among real rates emerges. The limited evidence for exchange rate coordination can be explained by the diverse exchange rate regimes prevailing in these economies, signaling differences in policy objectives.

Keywords: Asian Currency Unit; currency coordination; structural breaks; exchange rate regimes; panel unit root (search for similar items in EconPapers)
JEL-codes: E58 F33 F36 N15 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mac, nep-mon, nep-opm and nep-sea
Date: 2015, Revised 2015
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Published in Singapore Economic Review 1550013.60(2015): pp. 1-25

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Journal Article: EXTENT OF EXCHANGE RATE COORDINATION IN ASIA (2015) Downloads
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