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Is the exchange rate regime really irrelevant for external adjustment?

Atish Ghosh (), Mahvash Qureshi and Charalambos Tsangarides ()

Economics Letters, 2013, vol. 118, issue 1, 104-109

Abstract: We argue that evidence on whether floating exchange rates facilitate external adjustment is contradictory because existing regime classifications do not adequately capture exchange rate flexibility relevant to external adjustment. Using a trade-weighted bilateral exchange rate volatility measure, we show that exchange rate flexibility indeed matters for current account dynamics.

Keywords: Current account dynamics; Exchange rate regime; Bilateral exchange rate volatility (search for similar items in EconPapers)
JEL-codes: F32 F41 (search for similar items in EconPapers)
Date: 2013
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Handle: RePEc:eee:ecolet:v:118:y:2013:i:1:p:104-109