Fear of Floating and Pegging: A Simultaneous Choice Model of De Jure and De Facto Exchange Rate Regimes

Juergen von Hagen () and Jizhong Zhou

No 7006, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We present an analysis of the determinants of de jure and de facto exchange rate regimes based on a panel probit model with simultaneous equations. The model is estimated using simulation-based maximum likelihood methods. The empirical results suggest a triangular structure of the model such that the choice of de facto regimes depends on the choice of de jure regimes but not vice versa. This gives rise to a novel interpretation of regime discrepancies.

Keywords: de facto exchange rate regimes; developing countries; simultaneous equations (search for similar items in EconPapers)
JEL-codes: C35 F33 F41 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-mon and nep-opm
Date: 2008-10
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