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Issues in Korean exchange rate policy

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  • Issues in Korean exchange rate policy
  • Black, Stanley W.
  • National Bureau of Economic Research


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Title Issues in Korean exchange rate policy
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Material Type Reports
Author(English)

Black, Stanley W.

Publisher

Cambridge, U.S.:National Bureau of Economic Research

Date 1996-09
Series Title; No NBER working paper series / 5747
Pages 28
Subject Country South Korea(Asia and Pacific)
Language English
File Type Link
Subject Economy < Financial Policy
Economy < Economic Administration
Holding National Bureau of Economic Research

Abstract

Korea faces a number of unique problems that affect its exchange rate policy. Among these are its asymmetric competitive position vis-…-vis Japan, which is both its major supplier of machine tools and a leading competitor in third markets; the current policy of financial liberalization that goes along with democratic liberalization; and the implications of the potential future unification of the Korean peninsula. This paper considers the question of exchange rate policy for Korea in the face of fluctuations in the yen/dollar rate, increasing competition from lower cost Asian countries, and financial liberalization. The paper deals with external vs. internal targets, choice of external comparison basket, and the effects of financial liberalization. The Korean choice of an independent exchange rate policy is analyzed in terms of the trade-off between external shocks and inflation-fighting credibility of the central bank. Financial liberalization brings with it increased capital mobility. (The rest omitted)