arrangement. This results in the dates given in the notes to Table 4. The table itself
summarizes the findings from estimating Equation 3.
The first column shows the fraction of firms that show significant exposure to the
dollar. The pegs are imperfect enough that there is sufficient variation even in the dollar
exchange rate for exposure to be measurable in these countries.16 As shown in the first
column, far more firms show statistically significant exposure to the dollar with a peg than
without one in Malaysia, the Philippines, and Thailand.
The third column gives the fraction of firms that show significant exposure to the
yen. As shown, there is apparently even greater exposure to the yen. Widespread yen
exposure occurs in all of the countries under their pegs. Under a peg, more than half the
firms in Indonesia, Korea, Malaysia and the Philippines, and nearly a third of the firms in
Taiwan and Thailand, show significant exposure to fluctuations in the yen. Without a peg,
only Taiwanese firms exhibit a notable yen exposure. With or without a peg, there is
apparently less exposure against the euro and the pound, shown in columns 2 and 4.
Overall, the table illustrates that the extent of foreign exchange exposure has been much
more widespread with a peg than without one.
The next table helps us explore whether this exposure reflects only the single brief
period of the Asian Crisis. Table 5 gives the result from re-estimating the equation
excluding the summer of 1997. There are some notable differences for Malaysia and
Thailand under a peg. Excluding the Asian Crisis period, most Malaysian firms appear to
be exposed only to the yen, not to the dollar, as they where when the crisis period was
16 As can be seen from Appendix Figure 1, all of the pegs except the post-1998 peg of Malaysia (its second peg) and the long-lasting peg of Hong Kong show variation. In the case of Hong Kong, we only estimate the exposure to the non-pegged currencies.