A common argument for pegging the exchange rate is that it enforces discipline on domestic monetary policy, thus stabilizing inflation expectations. This paper argues that this reasoning does not necessarily apply to East Asia, as the nominal exchange rate pegging policies of these economies are...

Since the East Asian crises of 1997, a number of East Asian economies have allowed greater exchange rate flexibility and abandoned monetary targets in favor of inflation targeting, apparently because the perceived usefulness of money as a predictor of inflation, i.e. the information content of...