Fear of floating in Asia and the credibility of true floaters?

S.K.A. Rizvi, Bushra Naqvi, Nawazish Mirza and Christian Bordes

Research in International Business and Finance, 2017, vol. 42, issue C, 149-160

Abstract: Quite often, countries commit to free floating exchange rate (ER) regimes but do not allow their ERs to float freely, exhibiting a fear of floating. We revisit ER regimes in Asia following the work of Calvo and Reinhart (2002), and also develop a new flexibility index based on probabilities gauging interventions in FX market. In light of our findings, we cannot disregard the existence of fear of floating in Asia, and find that economies widely known as truly floating economies exhibit this fear too. Further, the results validate our concerns regarding the IMF’s methodology of regime classification intermingling credible inflation targeting with fear of floating.

Keywords: Exchange rate regime; Flexibility; Fear of floating; Asia; Pegging (search for similar items in EconPapers)
JEL-codes: E42 E58 F31 F33 F41 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:42:y:2017:i:c:p:149-160

DOI: 10.1016/j.ribaf.2017.05.007

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