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Exchange Rate Overshooting in East Asian Countries

Author

Listed:
  • Mohsen Bahmani-Oskooee
  • Nisit Panthamit

Abstract

Excess money supply was one factor among several contributing to the 1997 financial crisis in East Asian countries. The crisis resulted in abnormal currency depreciation. Using monthly data over the period 1987-2000 and error correction modeling techniques, we pay tribute to Rudiger Dornbusch by providing strong evidence for his "overshooting" hypothesis in Thailand, Korea, Indonesia, Malaysia, and the Philippines. We show that overshooting is a short-run phenomenon; in the long run, money seems to be neutral.

Suggested Citation

  • Mohsen Bahmani-Oskooee & Nisit Panthamit, 2006. "Exchange Rate Overshooting in East Asian Countries," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 42(4), pages 5-18, July.
    • Handle: RePEc:mes:emfitr:v:42:y:2006:i:4:p:5-18
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    Citations

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    Cited by:

    1. Khumalo, Zitsile Zamantungwa & Eita, Joel Hinaunye & Choga, Ireen, 2020. "An Empirical Test of Real Exchange Rate Overshooting in Selected African Countries," MPRA Paper 101303, University Library of Munich, Germany.
    2. Peijie Wang, 2010. "Assessment on Valuation of RMB – a triangular analysis approach," Working Papers 2010-FIN-02, IESEG School of Management.
    3. Pippenger, John, 2008. "Freely Floating Exchange Rates Do Not Systematically Overshoot," University of California at Santa Barbara, Economics Working Paper Series qt97m8z6hw, Department of Economics, UC Santa Barbara.

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