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Do Fixers Perform Worse than Non-Fixers during Global Recessions and Recoveries?

Marco Terrones ()

No 139, Working Papers from Peruvian Economic Association

Abstract: There is an important debate about how economies with different exchange rate regimes performed during the Great Recession and its ensuing recovery. While economic theory suggests that economies with fixed exchange rates are more affected and recover more slowly from global shocks than economies with non-fixed exchange rates, the empirical evidence on the most recent global recession has been mixed. This paper examines the exchange rate and economic growth nexus and assesses how this relationship is affected by the four global recessions and recoveries the world economy has experienced post-Bretton Woods. While there is no robust long-term relationship between exchange rate regimes and growth, there is evidence that fixers recover from global recessions at a weaker pace than non-fixers.

Keywords: Cycles; international cycles; global recessions and recoveries; exchange rates; economic growth of open economies (search for similar items in EconPapers)
JEL-codes: E32 F31 F41 F43 F44 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mac, nep-mon and nep-opm
Date: 2019-01
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