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Exchange Rate Intervention and Degree of Openness

NIDA Economic Review Journal

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Field Value
 
Title Exchange Rate Intervention and Degree of Openness
 
Creator Wanasilp, Wannakiti
 
Description Since most of existing literature analyses exchange rate intervention in a partialequilibrium framework, implying that the spillover effect of the intervention on othersectors is ignored, in this paper, however, the problem will be posed under generalequilibrium setting in which the spillover effect of exchange rate intervention will betaken into account. Using degree of openness as a proxy for the spillover effect ofexchange rate intervention, it is postulated that, with high degree of openness, thespillover effect of the intervention is beneficial since it will further help stabilizing thewhole economy. Hence, with high degree of openness, the optimal exchange rateband to be narrower than the one with low degree of openness, signifying the centralbank’s bias toward more intervention rather than floating of exchange rate. With highdegree of openness, large portion of GDP is accounted for by international tradetransactions. Therefore, stabilizing international trade sector via exchange rateintervention will have positive spillover effect by helping to further stabilize the wholeeconomy. Exchange rate intervention should be, therefore, beneficial for a country inwhich degree of openness is relatively high.
 
Publisher Development Economic Review (พัฒนาการเศรษฐกิจปริทรรศน์)
 
Date 2014-01-01
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier //tci-thaijo.org/index.php/NER/article/view/22399
 
Source Development Economic Review (พัฒนาการเศรษฐกิจปริทรรศน์); Vol 8 No 1 (2557): NIDA Economic Review Journal; 10
1906-2540
 
Language eng
 
Relation //tci-thaijo.org/index.php/NER/article/view/22399/19218
 
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