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An Economic Thought about How to Detect Currency Manipulation

Author

Listed:
  • Jeong Eui Suh

    (The Bank of Korea)

Abstract

Criteria listed in the US Treasury Report to detect currency manipulation of major trading partner countries are necessarily ad hoc. In this paper, a simple economic-thought-based measure has been developed linking Fisher equation and CIRP with keeping implications of the impossible trinity in mind. Results of applying the measure to actual data do not seem to support the suspicion that major trading partner countries of the US might be manipulating their currencies until recently. Although further endeavors should be warranted in the case of China, even its currency practices seem to have been enhancing since 2012.

Suggested Citation

  • Jeong Eui Suh, 2020. "An Economic Thought about How to Detect Currency Manipulation," Economics Bulletin, AccessEcon, vol. 40(2), pages 1486-1497.
    • Handle: RePEc:ebl:ecbull:eb-20-00053
    as

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    File URL: http://www.accessecon.com/Pubs/EB/2020/Volume40/EB-20-V40-I2-P128.pdf
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    References listed on IDEAS

    as
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    3. Claudio Borio & Robert Neil McCauley & Patrick McGuire & Vladyslav Sushko, 2016. "Covered interest parity lost: understanding the cross-currency basis," BIS Quarterly Review, Bank for International Settlements, September.
    4. Fornaro, Luca, 2015. "Financial crises and exchange rate policy," Journal of International Economics, Elsevier, vol. 95(2), pages 202-215.
    5. Staiger, Robert W. & Sykes, Alan O., 2010. "‘Currency manipulation’ and world trade," World Trade Review, Cambridge University Press, vol. 9(4), pages 583-627, October.
    6. Dietrich Domanski & Emanuel Kohlscheen & Ramon Moreno, 2016. "Foreign exchange market intervention in EMEs: what has changed?," BIS Quarterly Review, Bank for International Settlements, September.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Currency manipulation; Fisher equation; Covered interest rate parity;
    All these keywords.

    JEL classification:

    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • F3 - International Economics - - International Finance

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