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Is a G-3 Target Zone on Target for Emerging Markets?

Author

Listed:
  • Reinhart, Carmen
  • Reinhart, Vincent
Abstract
With many emerging market currencies tied to the U.S. dollar either implicitly or explicitly, movements in the exchange values of the currencies of major countries–in particular the prolonged appreciation of the U.S. dollar vis-a-vis the yen and the deutsche mark in advance of Asia’s troubles–is argued to have worsened the competitive position of many emerging market economies. One solution to reducing destabilizing shocks emanating from abroad, the argument runs, would be to reduce the variability of the G-3 currencies by establishing target bands.1 This paper examines the argument for such a target zone from an emerging market perspective but will be silent on the costs and benefits for industrial countries.

Suggested Citation

  • Reinhart, Carmen & Reinhart, Vincent, 2002. "Is a G-3 Target Zone on Target for Emerging Markets?," MPRA Paper 7581, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:7581
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    References listed on IDEAS

    as
    1. Carmen M. Reinhart & Vincent Raymond Reinhart, 2002. "What Hurts Emerging Markets Most? G3 Exchange Rate or Interest Rate Volatility?," NBER Chapters, in: Preventing Currency Crises in Emerging Markets, pages 133-170, National Bureau of Economic Research, Inc.
    2. Carmen M. Reinhart & Graciela L. Kaminsky, 1999. "The Twin Crises: The Causes of Banking and Balance-of-Payments Problems," American Economic Review, American Economic Association, vol. 89(3), pages 473-500, June.
    3. Kaminsky, Graciela L. & Lewis, Karen K., 1996. "Does foreign exchange intervention signal future monetary policy?," Journal of Monetary Economics, Elsevier, vol. 37(2-3), pages 285-312, April.
    4. Guillermo A. Calvo & Carmen M. Reinhart, 2002. "Fear of Floating," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 117(2), pages 379-408.
    5. Carmen M. Reinhart, 2002. "An Introduction," The World Bank Economic Review, World Bank, vol. 16(2), pages 149-150, August.
    6. Dominguez, Kathryn M & Frankel, Jeffrey A, 1993. "Does Foreign-Exchange Intervention Matter? The Portfolio Effect," American Economic Review, American Economic Association, vol. 83(5), pages 1356-1369, December.
    7. Richard H. Clarida, 1999. "G3 Exchange Rate Relationships: A Recap of the Record and a Review of Proposals for Change," NBER Working Papers 7434, National Bureau of Economic Research, Inc.
    8. Frankel, Jeffrey A. & Rose, Andrew K., 1996. "Currency crashes in emerging markets: An empirical treatment," Journal of International Economics, Elsevier, vol. 41(3-4), pages 351-366, November.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • F30 - International Economics - - International Finance - - - General

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