One of the striking characteristics of the recent currency crises in East Asia is the sharp reductions in output that followed depreciations. This paper draws on an earlier literature on contractionary depreciations to motivate an empirical model of the relationship between exchange rate and...

This paper examines how financial market changes affect the usefulness of two alternatve indicators of monetary policy in Japan, a monetary aggregate and an interest rate. The paper tests whether these variables are good predictors of output, and whether responses to shocks to these variables...

I review the case for pegging the exchange rate by surveying the recent theoretical literature on the choice of exchange rate regimes. This literature suggests that by enhancing the transparency or controllability of monetary policy, pegging may be more effective in lowering inflation...

This paper uses a simple theoretical model to show how the credibility of unsterilized intervention policy may affect the pattern of adjustment in the exchange rate, velocity, and asset prices: When the outcome of unsterilized intervention is credible, any degree of exchange rate stability can...

This study attempts to shed light on whether stock price movements have contributed to recent fluctuations in bank lending in Japan by examining the historical relationship between stock prices and bank lending in that country. It is found that prior to the mid-1980s the relationship between...