A soft edge target zone model : theory and application to Hong Kong

Yu-Fu Chen, Michael Funke & Nicole Glanemann

Hong Kong’s currency is pegged to the US dollar in a currency board arrangement. In autumn 2003, the Hong Kong dollar appreciated from close to 7.80 per US dollar to 7.70, as investors feared that the currency board would be abandoned. In the wake of this appreciation, the monetary authorities revamped the one-sided currency board mechanism into a symmetric two-sided system with a narrow exchange rate band. This paper reviews the characteristics of the new currency board arrangement and embeds a theoretical soft edge target zone model typifying many intermediate regimes, to explain the notable achievement of speculative peace and credibility since May 2005. -- Currency Board Arrangement ; Target Zone Model ; Credibility ; Hong Kong

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Year of publication:	2009
Authors:	Chen, Yu-Fu ; Funke, Michael ; Glanemann, Nicole
Publisher:	Dundee : Dep. of Economic Studies, Univ. of Dundee
Subject:	Wechselkurspolitik \| Exchange rate policy \| Internationales Währungssystem \| International monetary system \| Currency-Board-System \| Currency board \| Aufwertung \| Currency appreciation \| US-Dollar \| US dollar \| Hongkong \| Hong Kong \| 2005-2009

Extent:	Online-Ressource (20 S.) graph. Darst.
Series:	Dundee discussion papers in economics. - Dundee : [Verlag nicht ermittelbar], ISSN 1473-236X, ZDB-ID 2196325-3. - Vol. 228
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Arbeitspapier ; Working Paper ; Graue Literatur ; Non-commercial literature
Language:	English
Notes:	Systemvoraussetzungen: Acrobat Reader
Classification:	C61 - Optimization Techniques; Programming Models; Dynamic Analysis ; E42 - Monetary Systems; Standards; Regimes; Government and the Monetary System ; F31 - Foreign Exchange ; F32 - Current Account Adjustment; Short-Term Capital Movements
Source:	ECONIS - Online Catalogue of the ZBW

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