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Post-Crisis Exchange Rate Policy in Five Asian Countries
Filling in the 'Hollow Middle'?

30 Pages Posted: 3 Feb 2006  

Leonardo Hernández

Banco Central de Chile

Peter J. Montiel

Williams College - Department of Economics

Date Written: November 2001

Abstract

Following the 1997-98 financial turmoil, crisis countries in Asia moved toward either floating or fixed exchange rate systems, reinforcing the bipolar view of exchange rate regimes and the hollow middle hypothesis. But some academics have claimed that the crisis countries` policies have been similar in the post- and pre-crisis periods. This paper analyzes the evidence and concludes that, except for Malaysia, which adopted a hard peg and imposed capital controls, the other crisis countries are floating more than before, though less than real floaters do. Further, the crisis countries` policies during the post-crisis period can be justified on second-best arguments.

Keywords: exchange rate policy

JEL Classification: F32 E65

Suggested Citation

Hernández, Leonardo and Montiel, Peter J., Post-Crisis Exchange Rate Policy in Five Asian Countries Filling in the 'Hollow Middle'? (November 2001). IMF Working Paper, Vol. , pp. 1-30, 2001. Available at SSRN: https://ssrn.com/abstract=880214

Leonardo Hernández (Contact Author)

Banco Central de Chile ( email )

Agustinas 1180
Santiago
Chile
56-2-670-2618 (Phone)
56-2-670-2106 (Fax)

Peter J. Montiel

Williams College - Department of Economics ( email )

Fernald House
Office: Fernald 14
Williamstown, MA 01267
United States
413-597-2103 (Phone)
413-597-4045 (Fax)

HOME PAGE: http://www.williams.edu/Economics/faculty/montiel.htm

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