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Title: |
An Empirical Assessment of Monetary Policy
Responses to Capital Inflows in Asia before the Financial Crisis |
| Author: |
Kwack, Sung
Yeung |
| Author
Affiliation: |
Howard U |
| Source: |
International Economic Journal, Spring 2001, v. 15, no. 1, pp. 95-113 |
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Publication Date: |
Spring 2001 |
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Abstract: |
This paper highlights monetary policy
implemented by monetary authorities in response to a surge of capital
inflows in Asia during the period 1985-1996. It statistically assesses
the effectiveness of monetary policy responses. Regression results show
that Asian countries as a group took the operation of a high rate of
sterilization and the foreign exchange market intervention which yielded
a small change in the exchange rate. Consequently, they succeeded in
keeping nominal exchange rates at desired levels and in limiting
increases in monetary growth, despite a surge in capital inflows. The
adoption of floating exchange rates, it is concluded, could have avoided
the occurrence of financial crisis in Asia. |
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