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Costs of Myanmar's multiple exchange-rate regime

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  • Masahiro Hori
  • Yu Ching Wong

Abstract

Myanmar's multiple exchange-rate regime creates various economic distortions. This paper describes the exchange-rate practices in Myanmar and develops a model of foreign exchange markets to estimate the welfare costs imposed by the current regime. Our analysis suggests that the equilibrium exchange rate could be around 400--500 kyat per US dollar, and trade openness measured using the equilibrium rate increases to more than 20% of gross domestic product (GDP) from less than 1% in the official statistics. The total welfare loss caused by the current regime is estimated to be in the order of 14--17% of GDP.

Suggested Citation

  • Masahiro Hori & Yu Ching Wong, 2013. "Costs of Myanmar's multiple exchange-rate regime," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 22(2), pages 209-233, March.
    • Handle: RePEc:taf:jitecd:v:22:y:2013:i:2:p:209-233
    DOI: 10.1080/09638199.2011.555561
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    References listed on IDEAS

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    1. Pierre-Richard Agénor & Robert P. Flood, 1992. "Unification of Foreign Exchange Markets," IMF Staff Papers, Palgrave Macmillan, vol. 39(4), pages 923-947, December.
    2. Caporale, Guglielmo Maria & Chui, Michael K F, 1999. "Estimating Income and Price Elasticities of Trade in a Cointegration Framework," Review of International Economics, Wiley Blackwell, vol. 7(2), pages 254-264, May.
    3. Abdelhak Senhadji, 1998. "Time-Series Estimation of Structural Import Demand Equations: A Cross-Country Analysis," IMF Staff Papers, Palgrave Macmillan, vol. 45(2), pages 236-268, June.
    4. David Tarr, 2014. "Second-Best Foreign Exchange Policy in the Presence of Domestic Price Controls and Export Subsidies," World Scientific Book Chapters, in: APPLIED TRADE POLICY MODELING IN 16 COUNTRIES Insights and Impacts from World Bank CGE Based Projects, chapter 4, pages 75-93, World Scientific Publishing Co. Pte. Ltd..
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    Cited by:

    1. Kubo, Koji, 2013. "Sources of fluctuations in parallel exchange rates and policy reform in Myanmar," IDE Discussion Papers 388, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    2. Kubo, Koji, 2014. "Deposit dollarization in Myanmar," IDE Discussion Papers 473, Institute of Developing Economies, Japan External Trade Organization(JETRO).

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