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Optimal currency baskets and the third currency phenomenon: Exchange rate policy in Southeast Asia

Bird, G and Rajan, R (2002) Optimal currency baskets and the third currency phenomenon: Exchange rate policy in Southeast Asia Journal of International Development, 14 (8). pp. 1053-1073.

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Abstract

Recent financial crises seem to have led to the broad consensus that developing countries should steer clear of exchange rate regimes that lie anywhere between the two extremes or 'corner solutions' of credibly fixed or flexible arrangements. But is this a reasonable position to adopt? Would developing countries be well advised to follow this policy recommendation? Should developing countries opt only for the corner solutions? Did the crisis-hit South-east Asian countries (Indonesia, Malaysia, Thailand and Philippines), make a mistake in effectively pegging to the US dollar rather than in pegging per se? Did pegging to the US dollar constitute a sub-optimal peg? If it did, what would have been the optimum peg? This paper attempts to provide answers to the preceding questions. The paper also conjectures more broadly about monetary policy in developing countries. © 2002 John Wiley and Sons, Ltd.

Item Type: Article
Authors :
NameEmailORCID
Bird, Gg.bird@surrey.ac.ukUNSPECIFIED
Rajan, RUNSPECIFIEDUNSPECIFIED
Date : 1 November 2002
Identification Number : https://doi.org/10.1002/jid.938
Depositing User : Symplectic Elements
Date Deposited : 16 May 2017 15:08
Last Modified : 17 May 2017 14:32
URI: http://epubs.surrey.ac.uk/id/eprint/817552

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