Comparison of Static and Dynamic Analyses on Exchange Rate Regimes in East Asia

32 Pages Posted: 14 Jul 2015

See all articles by Naoyuki Yoshino

Naoyuki Yoshino

Asian Development Bank Institute

Sahoko Kaji

Keio University

Tamon Asonuma

International Monetary Fund Research Department

Date Written: July 13, 2015

Abstract

This paper compares three methods of analyzing exchange rate regimes in East Asia: static analysis, conventional dynamic analysis, and dynamic transition analysis. First we provide quantitative results that both estimated parameters for Thailand and time intervals are applied symmetrically across the three approaches. Our comparable simulation results illustrate how these three analyses are mutually related. Comparisons across the three methods demonstrate limitations of the static and conventional dynamic analyses where exchange rate regimes remain unchanged over the analysis horizon. Moreover, we emphasize three advantages of the dynamic transition analysis over the static and conventional dynamic analyses in that shifts from the current regime to alternative regimes are contrasted with a benchmark case of maintaining the current regime over the analysis horizon.

Keywords: exchange rate regimes, dynamic transition analysis, capital account management, exchange rate stability

JEL Classification: F33, F41, F42

Suggested Citation

Yoshino, Naoyuki and Kaji, Sahoko and Asonuma, Tamon, Comparison of Static and Dynamic Analyses on Exchange Rate Regimes in East Asia (July 13, 2015). ADBI Working Paper 532. Available at SSRN: https://ssrn.com/abstract=2630057 or http://dx.doi.org/10.2139/ssrn.2630057

Naoyuki Yoshino (Contact Author)

Asian Development Bank Institute ( email )

Kasumigaseki Building 8F
3-2-5, Kasumigaseki, Chiyoda-ku
Tokyo, 100-6008
Japan

Sahoko Kaji

Keio University ( email )

2-15-45 Mita
Minato-ku
Tokyo, 108-8345
Japan

Tamon Asonuma

International Monetary Fund Research Department ( email )

700 19th Street NW
Washington, DC 20431
United States

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