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Financial and capital account liberalization in the pacific basin : Korea and Taiwan during the 1980's

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  • Financial and capital account liberalization in the pacific basin
  • Chinn, Menzie D.; Maloney, William F.
  • National Bureau of Economic Research


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Title Financial and capital account liberalization in the pacific basin
Similar Titles
Sub Title

Korea and Taiwan during the 1980's

Material Type Reports
Author(English)

Chinn, Menzie D.; Maloney, William F.

Publisher

Cambridge:National Bureau of Economic Research

Date 1996-11
Series Title; No NBER Working Paper Series / 5814
Pages 32
Subject Country South Korea(Asia and Pacific)
Taiwan(Asia and Pacific)
Language English
File Type Link
Original Format pdf
Subject Economy < Financial Policy
Holding National Bureau of Economic Research

Abstract

This paper presents an alternative method of testing for financial capital mobility in the absence of forward exchange markets. A model of domestic interest rate determination during liberalization is applied to Korean and Taiwanese data. A variety of diagnostic and recursive tests are used to isolate structural breaks in the data. It is shown that Korean interest rates behave as if determined domestically until late 1988 or early 1989, while Taiwanese rates exhibit this behavior until early 1989. Thereafter, these economies' interest rates appear tightly linked to the EuroYen rate. These results contrast with those obtained by Reisen and Yches (1993) which indicated a single opening and closing for Korea, and no structural break for Taiwan. They also differ from those results of Jwa (1994) indicating two temporary openings for Korea. (The rest omitted)