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Asia Confronts the Impossible Trinity

Ila Patnaik () and Ajay Shah ()

No 204, ADBI Working Papers from Asian Development Bank Institute

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; asian economies (search for similar items in EconPapers)
JEL-codes: E40 E60 F41 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mac, nep-mon, nep-opm and nep-sea
Date: 2010-03-12
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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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