Assessing Co-Ordinated Asian Exchange Rate Regimes: Proposal for a Possible Move Towards a Common Currency
University of Akron - Department of Finance
Cal B. Muckley
University College Dublin (UCD) - UCD Smurfit Graduate School of Business
January 5, 2010
Journal of International Financial Markets, Institutions and Money, 2011
This study assesses prospective Asian exchange rate regimes and finds short- and longrun currency dynamics more conducive to the introduction of a common peg based on a basket of the European euro, the United States dollar and the Japanese yen than the alternative of a United States dollar peg exchange rate regime. Exchange rate systems of 3, 4 and 5 - Asian currencies are considered and the dynamics in a set of four European currencies prior to the introduction of the Euro provides benchmark evidence. The evidence for an Asian basket peg exchange rate regime is strengthened when, unlike prior studies, estimates of the long-run parameters account for time-varying volatility effects.
Number of Pages in PDF File: 27
Keywords: Asia, Basket Exchange Rates, Currency Pegs, Exchange Rate Regimes
JEL Classification: F02, F31, F33, F42Accepted Paper Series
Date posted: January 6, 2010 ; Last revised: February 2, 2010
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