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Capital flows and exchange rates : Recent Korean and Taiwanese experiences and challenges

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  • Capital flows and exchange rates
  • Hsiaoa, Frank S.T.; Hsiao, Mei-chu W.
  • University of Colorado at Boulder


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Title Capital flows and exchange rates
Similar Titles
Sub Title

Recent Korean and Taiwanese experiences and challenges

Material Type Articles
Author(English)

Hsiaoa, Frank S.T.; Hsiao, Mei-chu W.

Publisher

[Boulder]:University of Colorado at Boulder

Date 2001
Pages 30
Subject Country South Korea(Asia and Pacific)
Taiwan(Asia and Pacific)
Language English
File Type Link
Original Format pdf
Subject Economy < Financial Policy
Holding University of Colorado at Boulder

Abstract

We first study the characteristics of the crisis and its impacts on Taiwanese and Korean economies. We have examined 22 macroeconomic fundamentals, such as inflation rates, government budget, trade balance, external debt, money supply, and ratios of average monthly imports and cumulative inward portfolio investment to international reserves, and compared with an extensive data set of the two countries. The comparisons point out that the macro fundamentals of both countries are basically the same, except the international finance sector. After defining currency crisis and banking crisis, the causes of crises are identified as the nominal exchange rates and the short-term external debt to international reserves ratios. In view of this, we use cointegration and causality tests to examine the relationship between these two time series. We have found a unidirectional causality from the short-term debt ratio to the exchange rate for Korea, but no causality between the two for Taiwan. (The rest omitted)