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The mirage of floating exchange rates

Carmen Reinhart

MPRA Paper from University Library of Munich, Germany

Abstract: This note summarizes some of the highlights of my longer paper with Guillermo Calvo”Fear of Floating.” Many emerging market countries have suffered financial crises. One view blames soft pegs for these crises. Adherents to that view suggest that countries move to corner solutions--hard pegs or floating exchange rates. We analyze the behavior of exchange rates, reserves, and interest rates to assess whether there is evidence that country practice is moving toward corner solutions. We focus on whether countries that claim they are floating are indeed doing so. We find that countries that say they allow their exchange rate to float mostly do not--there seems to be an epidemic case of “fear of floating.”

Keywords: fear; of; floating; fixed; exchange; rates; interest; rates; reserves (search for similar items in EconPapers)
JEL-codes: F31 G1 (search for similar items in EconPapers)
Date: 2000-05
References: Add references at CitEc
Citations: View citations in EconPapers (131)

Published in American Economic Review 2.90(2000): pp. 65-70

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Related works:
Journal Article: Mirage of Floating Exchange Rates (2000) Downloads
Journal Article: The Mirage of Floating Exchange Rates (2000) Downloads
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