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The Interest Rate-Exchange Rate Nexus in the Asian Crisis Countries

Sharp exchange rate depreciations in the East Asian crisis countries (Indonesia, Korea, and Thailand) raised doubts about the efficacy of increasing interest rates to defend the currency. Using a standard monetary model of exchange rate determination, this paper shows that tighter monetary policy wa...

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Bibliographic Details
Main Author: Ghosh, Atish
Other Authors: Basurto, Gabriela
Format: eBook
Language:English
Published: Washington, D.C. International Monetary Fund 2000
Series:IMF Working Papers
Subjects:
Interest Rates
Investment
Money And Interest Rates: General
Finance
Return On Investment
Monetary Economics
Currency; Foreign Exchange
Financial Services
Real Interest Rates
Monetary Policy, Central Banking, And The Supply Of Money And Credit: General
Intangible Capital
National Accounts
Money
Money Supply
International Financial Markets
Foreign Exchange
Monetary Base
Depreciation
Demand For Money
Saving And Investment
Banks And Banking
Investments: General
Macroeconomics
Interest Rates: Determination, Term Structure, And Effects
Capacity
Exchange Rates
Capital
Money And Monetary Policy
Korea, Republic Of
Online Access:
Collection: International Monetary Fund - Collection details see MPG.ReNa
Description
Summary:Sharp exchange rate depreciations in the East Asian crisis countries (Indonesia, Korea, and Thailand) raised doubts about the efficacy of increasing interest rates to defend the currency. Using a standard monetary model of exchange rate determination, this paper shows that tighter monetary policy was in fact associated with an appreciation of the exchange rate. Moreover, there is little evidence of higher real interest rates contributing to a widening of the risk premium
Physical Description:25 pages
ISBN:9781451843736

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