Macroeconomic linkage

de Takatoshi Itō, Anne O. Krueger

This volume explores the macroeconomic experience of East Asia in the 1980s and the impact of the region's growth on the rest of the world. The authors examine variables such as current account surpluses and deficits, as well as the ways in which exchange rate fluctuations in today's global economy affect the economies of countries not only in the same region but across the globe. These fourteen papers are organized around four themes: the overall determinants of growth and trading relations in the region; monetary policies in relation to capital controls and capital accounts; the impact of exchange rates on industrial structure; and the potential for greater regional integration. The contributors cover topics such as interactions among exchange rate movements, trade balances, and capital flows in Japan, Korea, and Taiwan, and the impact of exchange rates on industrial structure, inventories, and prices of both domestic and exported goods. One set of papers, examining the role of government monetary policy, reveals that when oil prices declined in Taiwan and the government loosened its monetary policy, growth increased without inflation. Another set of papers, focusing on the extent of regional integration in East Asia, finds that most of these nations' currencies are more closely tied to the dollar than to the yen. Macroeconomic Linkage offers a careful study of economic developments in East Asia that will be especially valuable to economists interested in international trade and exchange rates and to regional experts who focus on East Asia.