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How to exit from fixed exchange rate regimes?

Ahmet Atil Asici (), Nadezhda Stanislavovna Ivanova () and Charles Wyplosz ()

International Journal of Finance & Economics, 2008, vol. 13, issue 3, pages 219-246

Abstract: This paper improves upon the recently developed literature on exits from fixed exchange rate regimes in three ways: (1) It allows for two indicators for post-exit macroeconomic conditions, the change in the exchange rate and the change in the output gap; (2) it tests whether the distinction between orderly and disorderly exit is statistically justified, and concludes that it is not; (3) it deals with the sample selection problem. The results, subject to extensive sensitivity analysis, suggest that post-exits are better when depegging occurs in good macroeconomic conditions - an unnatural move for most policymakers - when world interest rates decline and in the presence of capital controls. Importantly, 'good' macroeconomic policies do not seem to help with post-exit performance. Copyright © 2007 John Wiley & Sons, Ltd.

Date: 2008
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Related works:
Working Paper: How to Exit from Fixed Exchange Rate Regimes (2005) Downloads
Working Paper: How to Exit From Fixed Exchange Rate Regimes? (2005) Downloads
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