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The Dynamics of Interbank Rate Behavior Under Alternative Monetary Regimes: The Case of Hong Kong

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  • Yi-Chi Chen

    (Department of Economics, National Cheng Kung University, No. 1, University Road, Tainan 701, Taiwan)

Abstract

This paper attempts to examine empirically the impacts of the institutional changes on the Hong Kong's interest rate, and to evaluate the relative merit of rules versus discretion over three distinct regimes. Our result suggests that the stance of policy making is associated with stability of the interbank market and thus the credibility of the currency board. We employ a structural break model under the Bayesian framework to endogenously determine the number and the type of structural breaks of the series under consideration. Finally, our empirical findings should shed a light on implications for monetary policies in Hong Kong.

Suggested Citation

  • Yi-Chi Chen, 2013. "The Dynamics of Interbank Rate Behavior Under Alternative Monetary Regimes: The Case of Hong Kong," China Economic Policy Review (CEPR), World Scientific Publishing Co. Pte. Ltd., vol. 2(02), pages 1-21.
    • Handle: RePEc:wsi:ceprxx:v:02:y:2013:i:02:n:s1793969013500076
    DOI: 10.1142/S1793969013500076
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    References listed on IDEAS

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    1. Jurgen A. Doornik & Marius Ooms, 2000. "Multimodality and the GARCH Likelihood," Econometric Society World Congress 2000 Contributed Papers 0798, Econometric Society.
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    4. Schwartz, Anna J., 1993. "Currency boards: their past, present, and possible future role," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 39(1), pages 147-187, December.
    5. Ramkishen S. Rajan & Reza Siregar, 2002. "Choice of Exchange Rate Regime: Currency Board (Hong Kong) or Monitoring Band (Singapore)?," Australian Economic Papers, Wiley Blackwell, vol. 41(4), pages 538-556, December.
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