The author is extremely grateful to two anonymous referees of this journal for their helpful comments and to Kaliappa Kalirajan for his detailed suggestions on the first draft of the manuscript. Earlier versions of this paper were presented at the National Graduate Institute for Policy Studies (GRIPS) and the ACE International Conference organised by the APEC Study Center in December 2007 at City University of Hong Kong. The author further acknowledges helpful comments from Koichi Hamada, Masahiro Kawai, Ronald McKinnon, Sven W. Arndt, Takashi Fukushima, Yihui Lan, Yoichi Okita, Yujiro Hayami and seminar participants. The research was conducted at GRIPS and, in part, at the Research Institute of Economy, Trade and Industry (RIETI). The views expressed herein are those of the author and do not represent the views of GRIPS/RIETI or those of ADBI. Responsibility for all errors rests solely with the author.
The Impact of Real Exchange Rate Flexibility on East Asian Exports
Article first published online: 8 JUL 2009
© 2009 The Author. Journal compilation © Blackwell Publishing Ltd
The World Economy
Special Issue: ISSUES ON ASIA'S FINANCE AND TRADE
Volume 32, Issue 7, pages 1075–1090, July 2009
How to Cite
Rahman, M. (2009), The Impact of Real Exchange Rate Flexibility on East Asian Exports. World Economy, 32: 1075–1090. doi: 10.1111/j.1467-9701.2009.01197.x
- Issue published online: 8 JUL 2009
- Article first published online: 8 JUL 2009
This paper estimates the impact of intra-regional real exchange rate flexibility on East Asian exports. The hypothesis is that the impact would be negative for East Asian countries regardless of their exchange rate regimes. The results validate the hypothesis. The findings show that for Chinese exports the long-run effect is as much as that of a real appreciation of renminbi. By contrast, for Japanese exports the effect is three times larger than that of a real appreciation of the yen. The findings imply that a regional currency basket mechanism would lessen the adverse effect of exchange rate flexibility and engineer a collective exchange rate adjustment for resolving the global payment imbalance against East Asia.