港元汇率制度应何去何从-HKSYU.DOCVIP

The Cost of Currency Stability: Hong Kong’s Experiences Che-cheong PoonDecember 2001 The Cost of Currency Stability: Hong Kong’s Experiences Che-cheong Poon December 2001 香　港　樹　仁　學　院 經　濟　學　系 Working Paper SeriesEconomics DepartmentHong Kong Shue Yan College Economics Department Hong Kong Shue Yan College PAGE PAGE 5 Working Paper Series December 2001 All Rights Reserved ISBN: 962-8719-27-0 Copyright ? 2003 by Hong Kong Shue Yan College Information on the Working Paper Series can be found on the last page. Please address any comments and further inquiries to: Mr. Wai-Kee Yuen Working Paper Coordinator Department of Economics Hong Kong Shue Yan College 10 Wai Tsui Crescent Braemar Hill Road North Point Hong Kong Fax:Tel:Email: sklee@ The Cost of Currency Stability: Hong Kong’s Experiences Che-cheong Poon Department of Economics Abstract This study provides an argument against the economic justification of the linked exchange rate system in Hong Kong because the current economic environment is much different from that in 1983. The paper consists of five sections. The first two sections examine the empirical as well as theoretical relationship between exchange rates and the key macroeconomic variables. The third section derives a paradigm to illustrate the transmission process of economic forces under the system. The fourth sections use the paradigm to analyze Hong Kong’s economic performance since the introduction of the system and give an account for the cost of currency stability. The final section gives a brief conclusion. Keywords: Purchasing Power parity Theorem; Exchange Equation; Interest Rate Parity Theorem; Fisher’s Equation of Interest; Linked Exchang