Exchange Rate Management and Crisis Susceptibility: A Reassessment
Atish Ghosh (),
Jonathan Ostry and
Mahvash Qureshi
IMF Economic Review, 2015, vol. 63, issue 1, 238-276
Abstract:
This paper revisits the bipolar prescription for exchange rate regime choice and asks two questions: Are the poles of hard pegs and pure floats still safer than the middle? And where to draw the line between safe floats and risky intermediate regimes? Our findings, based on a sample of 50 emerging market economies over 1980–2011, show that macroeconomic and financial vulnerabilities are significantly greater under less flexible exchange rate regimes—including hard pegs—as compared with floats. Although not especially susceptible to banking or currency crises, hard pegs are significantly more prone to growth collapses, suggesting that the security of the hard end of the prescription is largely illusory. Intermediate regimes as a class are the most susceptible to crises, but “managed floats”—a subclass within such regimes—behave much more like pure floats, with significantly lower risks and fewer crises. “Managed floating,” however, is a nebulous concept; a characterization of more crisis-prone regimes suggests no simple dividing line between safe floats and risky intermediate regimes.
Date: 2015
References: Add references at CitEc
Citations: View citations in EconPapers (71)
Downloads: (external link)
http://www.palgrave-journals.com/imfer/journal/v63/n1/pdf/imfer201429a.pdf Link to full text PDF (application/pdf)
http://www.palgrave-journals.com/imfer/journal/v63/n1/full/imfer201429a.html Link to full text HTML (text/html)
Access to full text is restricted to subscribers.
Related works:
Working Paper: Exchange Rate Management and Crisis Susceptibility: A Reassessment (2014) 
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:pal:imfecr:v:63:y:2015:i:1:p:238-276
Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/41308/PS2
Access Statistics for this article
More articles in IMF Economic Review from Palgrave Macmillan, International Monetary Fund
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().