نوسانات نرخ ارز و اتحادیه ارز در نیوزیلند

The conventional wisdom is that currency unions reduce exchange rate volatility. By definition, a currency union perfectly stabilizes the nominal exchange rate between the member countries. Nevertheless, variability in exchange rates with non-members matters too. This paper focuses on currency unions and exchange rate volatility with particular reference to New Zealand. For New Zealand, adopting either the Australian or the American dollar in the mid-1980s would not have reduced short-term exchange rate volatility. However, adopting the American dollar would have reduced cyclical exchange rate variability, and would have done so by more than a currency union with Australia.

European monetary union, Latin American dollarization and currency crises in Asian crawling peg countries have focused attention on the question of what exchange rate regime is appropriate. One conclusion that academics and policymakers generally agree on is that only a hard peg or a float is sustainable when capital markets are open (Fischer, 2001). Arguments about which of these two corner solutions is best are based on a trade-off between macroeconomic flexibility and microeconomic efficiency. Some of the supposed efficiency gains are due to lower exchange rate variability. New Zealand is an interesting case study because it has low, stable inflation and developed financial markets, unlike a number of developing countries, as well as diversified trading partners, unlike some developed countries where adopting a foreign currency has been suggested. Even so, New Zealanders have debated the possibility of adopting either the Australian or the American dollar in place of the New Zealand dollar, which has been floating without intervention since 1985. Each of the main contributions to the New Zealand debate — Coleman (1999), Grimes, Holmes and Bowden (2000) and Hargreaves and McDermott (2000) — has claimed that exchange rate volatility would be lower in a currency union, and this is expected to encourage trade and investment. This paper revisits the issue of exchange rate volatility and currency union. Section 2 presents motivation for the research, touching on the links between exchange rate volatility and trade and investment. The paper goes on to discuss how currency union affects exchange rate volatility and how volatility considerations affect the choice of an anchor currency (Section 3), before presenting new evidence for New Zealand regarding the effect of alternative currency unions on exchange rate volatility (Section 4). Conclusions follow in Section 5.

Should the government allow the exchange rate to float freely or to adopt another nation’s currency? And if another’s currency is to be adopted, whose should it be? The answers to these questions are based on a range of considerations, one of which is exchange rate volatility. Reductions in cyclical exchange rate volatility may lead to expanded trade and investment as well as lower interest rates. This paper builds counterfactual exchange rate series to describe the exchange rates New Zealand would have faced in two alternative currency unions. These are used to compare exchange rate volatility with an independent currency and with a currency union. From one quarter to the next, New Zealand’s exchange rate would have been no less volatile in a currency union with either the United States or Australia from 1985. However, at cyclical frequencies New Zealand would have had a less variable exchange rate had it been in such a currency union. This finding appears robust to different ways of constructing the exchange rate index and to different samples. Using the metric of exchange rate variability alone, New Zealand should consider adopting the United States’ dollar rather than the Australian dollar.