Essays on regime changes in exchange rate markets (Thailand, Malaysia, Indonesia, Korea, Japan)

My dissertation is motivated by several events that occurred in the international financial markets during the 1980s and 1990s. Those events induced regime changes in exchange rate markets as well as their systems in many different senses. My dissertation investigates those regime changes from several different angles. The thesis consists of three essays.; The first essay analyzes the effects of three different categories of factors on the collapse of the currency regimes in East Asian countries: changes in speculators' expectations, domestic economic fundamentals, and external economic shocks. Constructing a three country framework of currency crises and applying the concepts of the first and second generation currency crisis models, I focus on the change in the devaluation probabilities of four Asian countries, Thailand, Malaysia, Indonesia, and Korea, between 1990 and 1997. The empirical results of this study confirm significant effects of the change in speculators' expectations on these countries. Declines in the domestic and Japanese capital returns and the depreciation of the Japanese yen against the US dollar also contributed to a rise in the devaluation probabilities in most of the countries.; The second essay investigates the factors determining the choice of exchange regimes (fixed, intermediate, and floating). I conduct the analysis using cross-country panel data of 138 countries from 1982 to 1999 with the multinomial logit model. The results show that an increase in inflation differential moves a country to an intermediate regime, while a decrease moves the country to a fixed regime. Unlike the previous studies that are inconclusive, I find that bank domestic credit and the current account balance explain regime changes to an intermediate regime.; The third essay tests the validity of the two-pole hypothesis, which assumes all regimes finally converge to either "peg" or "float". I employ two different groups of economic variables: one relates to the optimal currency area (OCA) literature and the other relates to currency crises (CC) discussions, and examine how economic factors affect the selection of each exchange rate regime. The result confirms that support for the two-pole hypothesis depends on types of variables, their direction of changes, as well as sample periods of analysis. More recent data provides weak support for the two-pole discussion and it makes more difficult to argue that the intermediate regime is a disappearing state.