The Determinants of Exchange Rate Regimes in Emerging Market Economies

Mehmet Güçlü ()

No 806, Working Papers from Ege University, Department of Economics

Abstract: The choice of exchange rate regime has become one of the most important issues one more time in many economies after the financial crises in recent years. In the wake of the financial crises, many countries, especially emerging market economies, opted for floating exchange rate regimes by forsaking the pegged regimes. Consequently, an old debate on the choice and determinants of exchange rate regimes has been triggered. Economists have started to debate what appropriate exchange rate regime for an economy is. When the tendency in recent years is taken into consideration, the choice of exchange rate regime of countries, especially emerging economies, needs to be analyzed. To do this, in this paper, we attempt to uncover how emerging market economies choose their exchange rate regimes. In other words, we try to find the economic and political factors underlying the choice of exchange rate regimes. The study includes 25 emerging market economies over the period 1970-2006. We use random effect ordered probit model in order to find the long run economic and political determinants of exchange rate regimes for emerging economies. The determinants of both the de jure and de facto exchange regimes are empirically analyzed in the paper.

Keywords: Exchange Rate Regime; Emerging Market (search for similar items in EconPapers)
JEL-codes: E42 F31 F33 F41 (search for similar items in EconPapers)
Pages: 15 pages
Date: 2008-05
New Economics Papers: this item is included in nep-cba, nep-cwa, nep-ifn, nep-mon, nep-opm and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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http://iibf.ege.edu.tr/economics/papers/wp08-06.pdf First version, 2008 (application/pdf)

Related works:
Chapter: The Determinants of Exchange Rate Regimes in Emerging Market Economies (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:ege:wpaper:0806

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