Regional integration in Asia has been considerably enhanced over the past 20 years or so. Whether integration helps Asian countries reduce their vulnerability to external shocks or is a channel for spreading external shocks remains an open question. This paper assesses the spillovers from US monetary policy shocks to Asian countries while taking into account country‐specific characteristics in explaining differences in timing and magnitude of responses across Asian countries. The results indicate that policy interest rates in Asian countries generally respond to innovations in the Fed rate in the same direction, but typically with a lag of one quarter. However, the size of the responses varies across Asian countries with respect to country‐specific characteristics. These results suggest that an independent monetary policy may not be feasible for an Asian developing country that adopts a pegged rate regime while being extensively integrated into the world economy. However, the hypothesis of the impossible trinity may not be relevant in the case of China.
The objective of this paper is to examine the role of the banking system in the growth of the Vietnamese economy in the process of the transition that started in the early 1990s. An ARDL approach-based multivariate regression technique is applied to shed light on the impact on the growth of banking development, which is measured by broad money and bank credit. The empirical findings confirm a positive long-term effect of banking development on growth, reflecting the important role of the banking system in a typical bank-based financial system in mobilizing and supplying capital to the economy, thus contributing to growth throughout the process of economic transition. The empirical findings also indicate a nonlinear effect and a diminishing marginal effect of banking development in the sub-period 2007–2020. The thresholds for the two measures of banking development are estimated to be around 107% and 101% of the GDP, respectively. This finding suggests that bank credit expansion needs to be closely controlled to be adaptive to the capital-absorptive capacity of the economy. To a certain extent, this finding is also an indicator of the ongoing extensive growth model adopted in Vietnam, which relies heavily on the quantity of invested capital.
In this paper we provide a review and synthesis of some of the available information and data regarding Vietnam's exchange rate regime, as well as an analysis of whether, and to what extent, the conduct of exchange rate policy has been consistent with a number of possible key policy objectives. To facilitate the analysis, annual and monthly data are compiled for both the nominal and real effective exchange rates (NEER and REER). The analysis suggests that the authorities have tended to place special emphasis on maintaining stability in the nominal, bilateral VND/USD exchange rate. As a consequence, there have been periods when the REER appreciated, indicating losses in international competitiveness. The official exchange rate's stability has also acted as a retardant in the development of the country's foreign exchange market. It appears that this stability has been neither necessary nor sufficient for inflation control.
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