Endnotes

¹This section is based on the arguments in Shin and Wang (2003) and Park and Shin (2008).

²While Park and Shin (2008) report the average trade intensity based on the sum of exports and imports, Table 1 reports the trade intensity of exports and imports separately.

³According to Urata (2006), while East Asia’s reliance on the Chinese market increased recently, the PRC’s trade with other East Asian economies declined to 45.3% (2000–2004 average) of its total trade from 60.5 % (1990–1994 average).

⁴This section draws on Shin and Sohn (2006); Kim, Lee, and Shin (2008); and Park and Shin (2008).

⁵This section introduces the findings in Park and Shin (2008).

⁶This is also confirmed by Kim and Lee (2008).

⁷While we focus on the nominal interest rates, it is possible to reach a different conclusion if the reasoning is based on the real interest rates. Because inflation was rapidly rising, the real interest rates in most Asian countries turned negative, which one can interpret to mean that the current monetary policy in these countries is expansionary.

⁸For example, Blanchard and Gali (2007) argued that if real rigidities are present, focusing only on inflation may not be optimal. When there is an oil shock, it is desirable to allow higher inflation in order to cushion the shock to output.

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