TY  - JOUR
AU  - Black, Stanley W
TI  - Issues in Korean Exchange Rate Policy
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 5747
PY  - 1996
Y2  - September 1996
DO  - 10.3386/w5747
UR  - http://www.nber.org/papers/w5747
L1  - http://www.nber.org/papers/w5747.pdf
N1  - Author contact info:
Stanley Black
E-Mail: sblack@unc.edu
M1  - published as Stanley Black. "Issues in Korean Exchange Rate Policy," in Takatoshi Ito and Anne O. Krueger, editors, "Changes in Exchange Rates in Rapidly Developing Countries: Theory, Practice, and Policy Issues" University of Chicago Press (1999)

AB  - Korea faces a number of unique problems that affect its exchange rate policy.  Among these are its asymmetric competitive position vis-…-vis Japan, which is both its major supplier of machine tools and a leading competitor in third markets; the current policy of financial liberalization that goes along with democratic liberalization; and the implications of the potential future unification of the Korean peninsula.  This paper considers the question of exchange rate policy for Korea in the face of fluctuations in the yen/dollar rate, increasing competition from lower cost Asian countries, and financial liberalization.  The paper deals with external vs. internal targets, choice of external comparison basket, and the effects of financial liberalization.  The Korean choice of an independent exchange rate policy is analyzed in terms of the trade-off between external shocks and inflation-fighting credibility of the central bank.  Financial liberalization brings with it increased capital mobility.  The paper also considers the possibility of a regional currency area, Korean unification, and long run equilibrium.
ER  -