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De facto exchange rate regime in Korea : Is it still a dollar peg?

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Frame of Image sor Woochan Kim
ABSTRACT DE FACTO EXCHANGE RATE REGIME IN KOREA: IS IT STILL A DOLLAR PEG? By Han Geun Moon
After the Asian economic crisis in the late 1990s, many East Asian countries including Korea has changed their exchange rate regime from the de facto dollar peg or the managed floating to the free-floating exchange rate regime. However, the
common view on the actual exchange rate regime in East Asian countries is that the official labels are different from the actual. Calvo and Reinhart (2000a) expressed
this as the “fear of floating”, and Mckinnon (2000) as “after the crisis, the East Asian dollar standard resurrected.” The purpose of this paper is to test the common view on the actual exchange rate regime, using very simple but intuitive OLS regression models based on Frankel and Wei’s work (1994). My regression results show that, firstly, East Asian countries including Korea have returned to the dollar peg or managed floating after the restoration from the crisis, as they did during the pre-crisis period. Possible
interpretations are the preponderance of dollar invoicing, the fear of floating, suffering from nominal anchor fragility, not yet overcoming the original sin and the honeymoon
effect. The results also show that Korea has substantially changed her exchange rate regime since January 2001, but other countries, even Taiwan and Singapore which had no crisis, are still the same as before. The sensitivity to the dollar has statistically
significantly decreased, bu


Full Text
Title De facto exchange rate regime in Korea
Similar Titles
Sub Title

Is it still a dollar peg?

Material Type Reports
Author(English)

Moon, Han Geun

Publisher

[Seoul]:KDI School of Public Policy and Management

Date 2001
Pages 65
Subject Country South Korea(Asia and Pacific)
Language English
File Type Documents
Original Format pdf
Subject Economy < Macroeconomics
Holding KDI School of Public Policy and Management

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Thesis(Master)