This paper estimates that about 50 ¡V 70% of the Hong Kong-dollar currency in circulation (equivalent to about $100 ¡V 140 billion), mostly in the form of high-denomination banknotes, was being circulated outside Hong Kong at the end of 2009. The large external circulation was mainly a result...

This paper first investigates whether there is a cointegration relationship between Hong Kong¡¦s consumption and wealth using the latest cointegration tests that allow for structural breaks. Our tests show there is only limited empirical support for the existence of a cointegration...

Increasing economic integration with Mainland China has contributed to the rapid expansion of service exports in Hong Kong. Growing at the current pace of 10-20% per annum, service exports would be a key contributor to GDP in the coming years, thanks to vibrant expansion in offshore trade and...

This paper estimates pass-through of exchange rate changes to domestic inflation in Hong Kong in a two-step approach. We first estimate exchange rate pass-through to import prices and then from import price to domestic inflation using a Phillips-Curve model. We find that Hong Kong¡¦s exchange...

In this paper we attempt to delineate conceptual issues relating to the definition of capital flows, and introduce a framework that organises survey data and accounting information at different time horizons to form a judgment on the nature and scale of fund flows in Hong Kong. Given the...

This paper studies the significance of Mainland-related shocks in determining Hong Kong money market interest rates after controlling for the influences of US variables. Analysis using a vector auto-regression model suggests that an unexpected rise in the Mainland policy interest rate, or a...

This study assesses the effectiveness and drawbacks of maximum loan-to-value (LTV) ratios as a macroprudential tool based on Hong Kong¡¦s experience and econometric analyses of panel data from 13 economies. The tool is found to be effective in reducing systemic risk stemming from the...