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Article: Perspectives on public policy: an intertemporal currency board

TitlePerspectives on public policy: an intertemporal currency board
Authors
Issue Date1999
PublisherBlackwell Publishing Asia. The Journal's web site is located at http://www.blackwellpublishing.com/journals/PER
Citation
Pacific Economic Review, 1999, v. 4 n. 2, p. 215-232 How to Cite?
AbstractThe paper shows that the traditional wisdom of raising interest rates to defend a currency enriches rather than punishes the speculators. Furthermore, using high interest rates as a currency defense tool often produces the opposite effect in times of crisis. A new approach is proposed of using Hong Kong dollar 'put' options as an explicit commitment by the government. The put option itself acts like an intertemporal currency board in keeping the linked exchange rate over time. This costly signaling produces a separating equilibrium that distinguishes the strength of the Hong Kong dollar from the other Asian currencies that were under pressure in 1997.
Persistent Identifierhttp://hdl.handle.net/10722/85731
ISSN
2015 Impact Factor: 0.388
2015 SCImago Journal Rankings: 0.346
References

 

DC FieldValueLanguage
dc.contributor.authorChan, Aen_HK
dc.contributor.authorChen, NFen_HK
dc.date.accessioned2010-09-06T09:08:31Z-
dc.date.available2010-09-06T09:08:31Z-
dc.date.issued1999en_HK
dc.identifier.citationPacific Economic Review, 1999, v. 4 n. 2, p. 215-232en_HK
dc.identifier.issn1361-374Xen_HK
dc.identifier.urihttp://hdl.handle.net/10722/85731-
dc.description.abstractThe paper shows that the traditional wisdom of raising interest rates to defend a currency enriches rather than punishes the speculators. Furthermore, using high interest rates as a currency defense tool often produces the opposite effect in times of crisis. A new approach is proposed of using Hong Kong dollar 'put' options as an explicit commitment by the government. The put option itself acts like an intertemporal currency board in keeping the linked exchange rate over time. This costly signaling produces a separating equilibrium that distinguishes the strength of the Hong Kong dollar from the other Asian currencies that were under pressure in 1997.en_HK
dc.languageengen_HK
dc.publisherBlackwell Publishing Asia. The Journal's web site is located at http://www.blackwellpublishing.com/journals/PERen_HK
dc.relation.ispartofPacific Economic Reviewen_HK
dc.titlePerspectives on public policy: an intertemporal currency boarden_HK
dc.typeArticleen_HK
dc.identifier.openurlhttp://library.hku.hk:4550/resserv?sid=HKU:IR&issn=1361-374X&volume=4&issue=2&spage=215&epage=232&date=1999&atitle=An+Intertemporal+Currency+Boarden_HK
dc.identifier.emailChan, A: awhchan@hku.hken_HK
dc.identifier.authorityChan, A=rp01043en_HK
dc.description.naturelink_to_subscribed_fulltext-
dc.identifier.doi10.1111/1468-0106.00073-
dc.identifier.scopuseid_2-s2.0-0032796981en_HK
dc.identifier.hkuros43463en_HK
dc.relation.referenceshttp://www.scopus.com/mlt/select.url?eid=2-s2.0-0032796981&selection=ref&src=s&origin=recordpageen_HK
dc.identifier.volume4en_HK
dc.identifier.issue2en_HK
dc.identifier.spage215en_HK
dc.identifier.epage232en_HK
dc.publisher.placeAustraliaen_HK
dc.identifier.scopusauthoridChan, A=37019602700en_HK
dc.identifier.scopusauthoridChen, NF=7401912432en_HK
dc.customcontrol.immutablecsl 141111-

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