The Importance of the Exchange Rate Regime in Limiting Misalignment

Justin M. Dubas

World Development, 2009, vol. 37, issue 10, pages 1612-1622

Abstract: Summary This paper explores how the choice of a country's exchange rate regime may affect exchange rate misalignment for developing and developed countries. A measure of misalignment is obtained by using a panel cointegration vector estimator. This paper finds that for developing countries, an intermediate exchange rate regime (a regime falling somewhere between a pure float and a hard peg) is most effective in preventing exchange rate misalignment. Additionally, the choice of an exchange rate regime as a means to limit misalignment matters for developing countries, but does not seem to matter for developed countries.

Keywords: equilibrium; exchange; rates; exchange; rate; regime; misalignment; developing; countries (search for similar items in EconPapers)
Date: 2009

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Persistent link: http://EconPapers.repec.org/RePEc:eee:wdevel:v:37:y:2009:i:10:p:1612-1622

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