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on International Finance |
| By: | Umezaki, So |
| Abstract: | This paper provides a case study to characterize the monetary policy regime in Malaysia, from a medium- and long-term perspective. Specifically, we ask how the central bank of Malaysia, Bank Negara Malaysia (BNM), has structured its monetary policy regime, and how it has conducted monetary and exchange rate policy under the regime. By conducting three empirical analyses, we characterize the monetary and exchange rate policy regime in Malaysia by three intermediate solutions on three vectors: the degree of autonomy in monetary policy, the degree of variability of the exchange rate, and the degree of capital mobility. |
| Keywords: | Monetary policy, Exchange rate, Capital control, Malaysia, Foreign exchange, Capital market |
| JEL: | E42 E58 F41 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:jet:dpaper:dpaper79&r=ifn |
| By: | Gordon Menzies; Daniel Zizzo |
| Abstract: | We present a macroeconomic market experiment on the financial determination of exchange rates, and consider whether the assumption that belief formation be treated as a classical hypothesis test, which we label inferential expectations, can explain the effect of uncertainty on exchange rates. In a non-stochastic environment, exchange rates closely follow standard predictions. In our stochastic environment, inferential expectations with a low test size alpha (conservative inferential expectations) predict exchange rates better than rational expectations in ten sessions out of twelve. Belief conservatism appears magnified rather than diminished at the market level, and the degree of belief conservatism seems connected to the failure of uncovered interest rate parity regressions. |
| JEL: | C91 D84 E50 F31 |
| Date: | 2006–12 |
| URL: | http://d.repec.org/n?u=RePEc:pas:camaaa:2007-02&r=ifn |
| By: | Kumakura, Masanaga |
| Abstract: | Against the background of increasing regional trade and investment, there is growing interest in monetary and macroeconomic policy coordination in East Asia. Although there is a sizable literature on macroeconomic linkages among East Asian countries and the potential merit of policy coordination in the region, the existing studies tend to examine these issues exclusively in terms of macroeconomic variables and do not consider how these aggregate variables are influenced by one prominent feature of a number of East Asian economies: their heavy dependence on the electronics industry. Although active engagement in the global electronics industry has been a powerful growth engine for the Asian countries, it has also left their economies vulnerable to cyclical fluctuations in the world electronics market. As the cycle of the global electronics industry exerts profound impacts on the medium-term dynamics of the Asian economies, it is imperative to take an explicit account of its influence when studying the way in which the regional economies are linked to one another and how this relationship can be altered by a specific policy initiative. We illustrate the importance of this point by examining recent studies on: (1) trade competition between China andother Asian countries and the role of the Chinese renminbi therein; and (2) the effect offluctuations in the yen/dollar exchange rate on the regional economies. |
| Keywords: | Electronics cycle, Export competition, Renminbi, Yen/dollar exchange rate, Electronics, International trade, Foreign exchange, East Asia, Southeast Asia |
| JEL: | F14 F15 F33 |
| Date: | 2006–10 |
| URL: | http://d.repec.org/n?u=RePEc:jet:dpaper:dpaper34&r=ifn |