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.
Cite this paper
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