TO FLOAT OR NOT TO FLOAT? CURRENCY REGIMES AND GROWTH

William Miles ()
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William Miles: Department of Economics, Wichita State University

Journal of Economic Development, 2006, vol. 31, issue 2, 91-105

Abstract: One recent line of research on exchange rates is the effect of fixed or floating currencies on long-term growth. One difficulty with such studies is that emerging market countries with certain imbalances and potentially hard-to-observe policy distortions are more likely to choose a fixed exchange rate regime, and thus estimates of the effect of exchange rates on growth are likely to be biased upward in magnitude. Results here indicate that when a measure of domestic distortions and macroeconomic imbalances is added to the model the exchange rate regime at most exacerbates existing distortions, and no longer appears to have an independent, significant effect on growth, contrary to some recent findings.

Keywords: International Finance; Open Economy Macroeconomics; Economic Growth (search for similar items in EconPapers)
JEL-codes: F3 F41 O4 (search for similar items in EconPapers)
Date: 2006
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Citations: View citations in EconPapers (11)

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Persistent link: https://EconPapers.repec.org/RePEc:jed:journl:v:31:y:2006:i:2:p:91-105

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