Does the Choice of Exchange Rate Regime Affect the Economic Growth of Developing Countries?

Glauco De Vita and Khine Sandar Kyaw ()
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Khine Sandar Kyaw: Oxford Brookes University, UK

Journal of Developing Areas, 2011, vol. 45, issue 1, 135-153

Abstract: This paper revisits, empirically, the question of whether the choice of exchange rate regime (floating currency, fixed rate or intermediate arrangement) has a direct effect on the long-term growth of developing countries. We use fixed effects panel estimation on a relatively large sample of 70 developing countries for the period 1981 to 2004. In addition to controlling for the level of income of these economies, we draw from alternative exchange rate regime classification schemes and account for the presence of an explicit monetary anchor to characterize policy. Our results indicate the absence of any robust relation between the choice of exchange rate regime and economic growth. The policy implication of these findings is clear. The choice of exchange rate policy has no direct impact on the long-term growth of developing countries.

Keywords: Exchange Rate Regimes; Economic Growth; Developing Countries (search for similar items in EconPapers)
JEL-codes: F31 O10 (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (14)

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Persistent link: https://EconPapers.repec.org/RePEc:jda:journl:vol.45:year:2011:issue1:pp:135-153

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