Exchange Market Pressure and the Credibility of Macau's Currency Board
In this study, we assess the credibility of the currency board arrangement (CBA) of the Macau Special Administrative Region by studying the relationship between exchange market pressure (EMP) and the anchors of a rule-based CBA, namely, interest rate arbitrage, exchange rate arbitrage and economic discipline. A pure CBA signals its credibility by allowing the first two anchors to function automatically and by pursuing sound fiscal policies. The analysis’ results suggest that Macau’s CBA has been characterised by a state of low volatility since late 1992, with the brief exception of the East Asian financial crisis period. The paper’s main finding is that fiscal fundamentals seem to have a more pronounced role in reducing EMP’s variability during periods of low volatility whilst interest rate arbitrage is more important in periods of high volatility. We conclude that Macau’s CBA is credible at present as reflected in the low frequency of observed EMP, in the narrowing of Macau’s interest rate differential vis-a-vis U.S. interest rates and in Macau’s substantial fiscal reserves.
Curriculum Vitae and Publication Record
In late January, Miguel Rocha de Rocha (a Nova SBE alumnus now running the economics department at Evora University) asked me for an updated publication list - just before faculty home pages were being discontinued. After quickly selecting 292 entries from my website (266 academic titles and 26 policy documents) and pointing to popular writings and media appearances of similar magnitude, I could not resist the urge of double checking and wondered whether this could take the form of a Working Paper. Encouraged by the librarian to submit the result, I soon realized that the total came to four digits, even leaving out all most political documents and communications while I held elected office. The result is listed in two tables, the first one with the nine types he suggested (roughly books, journal articles and short writings), the second with print, radio and TV, fetched from often cryptic entries in diaries. It is prefaced by a curriculum vitae, minimally updating the one I had written and posted over ten years ago.
The Financial Markets of Hong Kong
Banks deposit-taking companies and the capital market the stock exchange futures, gold, investment management and regulation the foreign exchange rate, monetary and fiscal policy.