ABSTRACT
Rüdiger Dornbusch and Yung Chul Park have made a convincing case for the bandbasket-crawl solution for exchange rate regimes in East Asia (see Chapter 1). At the heart of the ‘BBC’ approach, the level of the exchange rate has something to do with the notion of equilibrium real exchange rate, for which a natural candidate is John Williamson’s (1994) FEER. Once the need for FEERs in Asian countries has been made clear, a vast and yet largely unexplored territory opens to empirical researchers in the field. Given its past research with John Williamson (Barrell and Wren-Lewis, 1989), the National Institute of Economic and Social Research (NIESR) was best qualified to undertake such an exercise, and the result is quite convincing. Chapter 15 is pioneering and delivers already clear-cut results (such as the presumption of undervaluation in Taiwan and Thailand but not in Singapore and South Korea). It paves the way for future researchers, who are likely to be numerous.
