Ahmet Asici; Nadezhda Ivanova; Charles Wyplosz ()
Additional contact information Ahmet Asici; Nadezhda Ivanova; Charles Wyplosz: IUHEI, The Graduate Institute of International Studies, Geneva
Authors registered in the RePEc Author Service: Charles Wyplosz (),
Nadezhda Stanislavovna Ivanova () and
Ahmet Atil Asici ()
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 occur 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.