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The Yen and Its East Asian Neighbors 1980-1995: Cooperation or Competition?

In: Changes in Exchange Rates in Rapidly Developing Countries: Theory, Practice, and Policy Issues

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  • Shinji Takagi

Abstract

By looking at how an East Asian currency moves when the yen fluctuates sharply against the US dollar, we sometimes find that the reaction has been much more significant than would be suggested by the econometric estimates of the weight of the yen in nominal exchange rate determination. Moreover, the Korean won and the Malaysian ringgit have tended to move more closely with a depreciating yen, suggesting the countries' emphasis on export promotion. The Singapore dollar, on the other hand, has tended to move more closely with an appreciating yen, underscoring the importance attached to price stability. The paper concludes that, given the trend appreciation of the yen during the recent past, emphasis on price stability has contributed more to monetary cooperation in Asia than emphasis on export promotion.
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Suggested Citation

  • Shinji Takagi, 1999. "The Yen and Its East Asian Neighbors 1980-1995: Cooperation or Competition?," NBER Chapters, in: Changes in Exchange Rates in Rapidly Developing Countries: Theory, Practice, and Policy Issues, pages 185-210, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberch:8619
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    References listed on IDEAS

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    1. Glick,Reuven & Hutchison,Michael (ed.), 1994. "Exchange Rate Policy and Interdependence," Cambridge Books, Cambridge University Press, number 9780521461108, January.
    2. Reuven Glick & Ramon Moreno, 1995. "Is pegging the exchange rate a cure for inflation? East Asian experiences," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue nov3.
    3. Shujiro Urata, 1993. "Japanese Foreign Direct Investment and Its Effect on Foreign Trade in Asia," NBER Chapters, in: Trade and Protectionism, pages 273-304, National Bureau of Economic Research, Inc.
    4. Takagi, Shinji, 1988. "A basket peg policy: Operational issues for developing countries," World Development, Elsevier, vol. 16(2), pages 271-279, February.
    5. Ito, Takatoshi & Krueger, Anne O. (ed.), 1993. "Trade and Protectionism," National Bureau of Economic Research Books, University of Chicago Press, edition 1, number 9780226386683, July.
    6. Jeffrey A. Frankel & Shang-Jin Wei, 1994. "Yen Bloc or Dollar Bloc? Exchange Rate Policies of the East Asian Economies," NBER Chapters, in: Macroeconomic Linkage: Savings, Exchange Rates, and Capital Flows, pages 295-333, National Bureau of Economic Research, Inc.
    7. Takatoshi Ito & Anne O. Krueger, 1994. "Macroeconomic Linkage: Savings, Exchange Rates, and Capital Flows," NBER Books, National Bureau of Economic Research, Inc, number ito_94-1, June.
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    Cited by:

    1. Saang Joon Baak & M. A. Al-Mahmood & S. Vixathep, 2007. "Exchange rate volatility and exports from East Asian countries to Japan and the USA," Applied Economics, Taylor & Francis Journals, vol. 39(8), pages 947-959.
    2. Ying, Yung-Hsiang & Kuan, Chung-Ming & Tung, Chris Y. & Chang, Koyin, 2013. "“Capital mobility in East Asian Countries is not so high”: Examining the impact of sterilization on capital flows," China Economic Review, Elsevier, vol. 24(C), pages 55-64.
    3. Shin-ichi Fukuda, 2002. "Post-crisis Exchange Rate Regimes in East Asia," CIRJE F-Series CIRJE-F-181, CIRJE, Faculty of Economics, University of Tokyo.
    4. Kawai, Masahiro & Takagi, Shinji, 2000. "Proposed strategy for a regional exchange rate arrangement in post-crisis East Asia," Policy Research Working Paper Series 2503, The World Bank.
    5. Banik, Nilanjan & Biswas, Basudeb & Criddle, Keith R., 2009. "Optimum currency area in South Asia: A state space approach," International Review of Economics & Finance, Elsevier, vol. 18(3), pages 502-510, June.
    6. Azam, Kazim, 2014. "Dependence Analysis between Foreign Exchange Rates: A Semi-Parametric Copula Approach," Economic Research Papers 270231, University of Warwick - Department of Economics.
    7. Glick, R., 2000. "Fixed or Floating: Is It Still Possible to Manage in the Middle?," Papers pb00-02, Economisch Institut voor het Midden en Kleinbedrijf-.
    8. Azam, Kazim, 2014. "Dependence Analysis between Foreign Exchange Rates: A Semi-Parametric Copula Approach," The Warwick Economics Research Paper Series (TWERPS) 1052, University of Warwick, Department of Economics.
    9. Andre Varella Mollick & Margot Quijano, 2004. "The Mexican Peso And The Korean Won Real Exchange Rates: Evidence From Productivity Models," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 29(1), pages 189-208, June.
    10. TAKAGI Shinji & ESAKA Taro, 2001. "Risk Premiums and Exchange Rate Expectations: A Reassessment of the So-Called Dollar Peg Policies of Crisis East Asian Countries, 1994-97," ESRI Discussion paper series 003, Economic and Social Research Institute (ESRI).

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    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions

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