원貨의 對外價値와 購買力平價

The Exchange Value of Won and Purchasing Power Parity

The exchange rate system of Korea between February 1980 and February 1990 was the system of multiple currency basket rate. Under this system of managed floating the Bank of Korea determined the central value of Won/U$ rate for everyday exchange market transactions according to a formula in which the weighted average of SDR basket and Korea's own currency basket was adjusted by a policy variable. The policy variable is thought to reflect the intentions and goals of policy authorities regarding exchange rate management. The purpose of this study is to make an empirical investigation of whether the consideration of purchasing power parity as a long-run equilibrium exchange rate concept underlied the management of Won/U$ rate according to this formula. And an empirical investigation of whether the concept of target purchasing power parity based on the inflation rate target specified in the annual economic management plan of the Korean government was given some meaningful consideration in exchange rate management was also made. Also an empirical investigation of how the exchange rate management according to this formula was carried out was made. The findings suggest that the actual and target purchasing power parities underlied the management of Won/U$ rate according to the above mentioned formula. The exchange rate was managed to offset partially the changes in actual and target purchasing power parities. It is thought that when actual purchasing power parity deviated from target purchasing power parity, the authority tried to maintain the international price competitiveness of Korean goods through exchange rate changes. The findings also suggest that the management of the exchange rate according to the officially announced formula was done with considerations of several policy goals. The authority tried to offset partially the changes in the nominal effective exchange rate of Won following a given change in the nominal effective exchange rate of US dollar. Some consideration was given to the maintenance of real effective exchange rate of Won. It is thought that the authority also considered an appropriate value of real effective exchange rate of Won based on the consideration of both internal and external balances in the management of Won/U$ rate.