TITLE:
Emerging Asia’s Version of the Mundell-Fleming Model
AUTHORS:
Suresh Ramanathan, Kian Teng
KEYWORDS:
Mundell-Fleming Model; Capital Mobility; Foreign Exchange Markets; Monetary Policy; Emerging Asia
JOURNAL NAME:
Modern Economy,
Vol.4 No.9,
September
5,
2013
ABSTRACT: This paper explains the Mundell-Fleming
model in the context of Emerging Asia economies management of capital mobility.
Central Banks and Financial Regulators in Emerging Asia adopt a modified
version of the model that incorporates two vital levers, a policy driven and
a market driven method that is adaptable to the magnitude of capital flow. A
policy combination mix of both policy and market driven provides smooth monetary policy signal transmission
to exchange rates.