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Working Paper
On the won and other East Asian currencies
A sticky price monetary model (Frankel, 1979) of exchange rates is applied to quarterly data on seven currencies: the Indonesian rupiah, Korean won, Malaysian ringgit, Philippine peso, Singapore dollar, Taiwanese dollar and the Thai baht. The model proves empirically unsuccessful, except in the case of the baht, and to a lesser extent, the Singapore dollar. A monetary model, augmented by the relative price of nontradables, is developed. This relative price variable proxies for the Balassa-Samuelson effect in East Asian real exchange rates identified in Chinn (1997b). The Korean won is best ...