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Malaysia gained attention for its use of capital controls in 1998, but since the early 2000s it has emphasised its commitment to an open capital account, despite experiencing volatile capital flows. As well as opting for financial openness, Malaysia chose to manage the value of its exchange rate after de-pegging from the US dollar in 2005. In a bid to escape the macroeconomic constraints that arise from capital mobility, Malaysia also chose to sterilise a large portion of capital inflows. It then made a further choice to use market-based sterilisation instruments more than regulatory sterilisation measures. These choices have carried costs and led to a build-up of economic risk. Three interrelated factors explain these choices: Malaysia’s strategy to manage the stigma arising from its imposition of controls in 1998, the increased level of financial integration that followed from this strategy, and the politically privileged position of groups that have benefitted from Malaysia’s commitment to capital openness. [ABSTRACT FROM PUBLISHER]

To forecast exchange rates, this paper proposes a new semiparametric smooth transition autoregressive model by allowing state variables to enter into the transition function in a nonparametric way. We propose a three-stage estimation procedure to estimate both the parametric and nonparametric parts in the new model, and a simulation study is conducted to demonstrate satisfactory finite sample performance. The empirical results, based on the proposed model applied to forecasting five major Asian exchange rates, show that the new model has some advantages in out-of-sample forecasting performance. [ABSTRACT FROM AUTHOR]

The Australian Government's White Paper ' Australia in the Asian Century' is the first large-scale official look in the twenty-first century at economic change in Asia and how it affects Australian opportunities and challenges. This paper comments on the analysis embodied in and the objectives defined by the White Paper, especially as it relates to Australian resources. This paper generally endorses the aspirations of the White Paper and notes that their achievement is going to require efforts and changes beyond those that are currently contemplated. It comments briefly on six things: the development context of twenty-first century Asian growth; growth and structural change in Asia and Australia's terms of trade; macroeconomic management of a resource-intensive Australian economy; restoring productivity growth; excellence in education; and linking Australia to Asian opportunity. [ABSTRACT FROM AUTHOR]

Global macroeconomic imbalances are among the key issues facing policymakers, especially in the USA and China. Although there has been a great deal of debate about this important issue, there appears to have been a general failure to adequately pay attention to the role of the exchange rate in allocating resources internally between tradables and non-tradables. These sectoral changes can have both real and macroeconomic consequences. This paper offers a simple analytical exposition of some of the issues relating to China's and East Asia's development and their impact on global imbalances using a two-sector tradable and non-tradables model. Copyright © 2011 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

The article analyzes the effect of worker remittances (WR) on the equilibrium real exchange rate (ERER) in recipient countries. It shows that in many countries, WR arrests official development assistance and private capital flows, which could cause macroeconomic problems by raising ERER. One conclusion drawn is that Dutch disease problems may not be a necessary side effect of remittance inflows, which are said to be larger in Asia and Latin America than in Africa and eastern Europe, mainly because countries such as India and Mexico receive more WR.

This study highlights the importance of choice of exchange rate system to macroeconomic stability of small-open emerging economies based on the outcomes of the recent exchange rate regime switches of three Asian countries - Indonesia, Malaysia, and Thailand. These countries have high similarities in their economic structures, but have reacted very differently in mitigating the economic distortion of the 1997 financial crisis, in particular in the adoption of exchange rate system. The empirical results of this study show that the amplified instability of macro-variables in Thailand and Indonesia, which was due to the crisis, were not stabilized by switching the exchange rate system to a flexible regime. The volatilities, however, were effectively stabilized after the countries made the second switch - from the independent float to the managed float with no pre-announcement. For Malaysia, a switch from the managed float to the pegged system successfully reduced the volatilities. The exchange rate misalignments of the countries, except Indonesia, were also reduced when the countries switched from a flexible to a more fixed managed float system. These empirical findings thus strongly support central banks of small-open emerging economies to adopt a more fixed, rather than a more flexible system. However, the managed float system needs to couple with efficient management to ensure a smooth and stable regime. [ABSTRACT FROM AUTHOR]

Presents a study which discussed the macroeconomic stabilization policies of China following the financial crisis in Asia. Reason for China to be able to maintain a constant exchange rate; Details on interest-insensitivity of its expenditures.

Investigates whether the macroeconomic performance of small open economy depends on the choice of exchange rate regimes in Hong Kong and Taiwan. Basic facts of growth and inflation and coefficients' stability of their vector autoregression; Relationship between macroeconomic performance and exchange rate regimes.

Evaluates the macroeconomic policies and future potential for cooperation with emphasis on exchange-rate management in Asia. Effect of economic interdependence in Asia; Review on Asia's exchange rate regimes and relative macroeconomic performances.