Study Of Managed Floating Exchange Rate System

This dissertation examines some macroeconomic issues, such as operation and effect, under managed float regime. Chapter 1 provides an overview of this dissertation. Chapter 2 investigates the reasons of a country adopt managed float regime. This chapter provides evidence that the exchange rate choice theory are not robustness; managed float regime leads to higher growth and are less prone to financial crisis, and managed float regime is adopted largestly by IMF member countries.Chapter 3 and 4 look at the characteristic of operation of five East Asian crisis countries and four Non- East Asian crisis countries' managed float regime. These countries are Singapore, South Korea, Thailand, Malaysia, Indonesia, Chile, India, Russia and Mexico. This chapter provides evidence about evolution of each country's currency basket composition and flexibility of exchange rate regime, the target of foreign exchange rate market intervention, and other supporting measures.Chapter 5 explores the managed float regime effect on domestic price stability and domestic monetary independence. The results indicate that five East Asian crisis countries' exchange rate pass-through effect under managed float regime are smaller than Chile and Mexico under floating exchange rate systems regime in most cases, the nine countries enjoy more monetary autonomy under more flexible exchange rate regime.The sixth chapter consists of two parts. The first part provides a evaluation of operation of Renminbi managed float regime from May 2005 to January 2008. During the period, the weight of US Dollar in Renminbi currency basket is about 89%,and Renminbi' s REER move very closely with US Dollar's REER from 2000 to June 2005. And since 2002 china accumulation big international payment surplus while Renminbi' s REER appear to devalue not appreciate until January 2008 when compare to early 2002. The results indicate China did not really adopt managed float until January 2008, although china's government announced officially adopt managed float since July 2005. In the second part, we examine whether is Calvo and Reinhart(2002)' s reasons of fear of floating can apply to Reminbi. We argue that the reason of Reminbi' s fear of floating is fear of appreciation, because china's economic expansion is disaproportionately dependent on trade surplus, appreciation harm export, then slower GDP and employment growth. Domestic financial sector weakness resulted in low income for family and then restrained domestic consumption as major source of economic growth, when Domestic financial sector efficient improve, raise family income and consumption, the government will let Renminbi really managed float.