Evolution and Performance of Exchange Rate Regimes
Aasim Husain,
Ashoka Mody,
Nienke Oomes,
Robin Brooks and
Kenneth Rogoff
No 2003/243, IMF Working Papers from International Monetary Fund
Abstract:
Using recent advances in the classification of exchange rate regimes, this paper finds no support for the popular bipolar view that countries will tend over time to move to the polar extremes of free float or rigid peg. Rather, intermediate regimes have shown remarkable durability. The analysis suggests that as economies mature, the value of exchange rate flexibility rises. For countries at a relatively early stage of financial development and integration, fixed or relatively rigid regimes appear to offer some anti-inflation credibility gain without compromising growth objectives. As countries develop economically and institutionally, there appear to be considerable benefits to more flexible regimes. For developed countries that are not in a currency union, relatively flexible exchange rate regimes appear to offer higher growth without any cost in credibility.
Keywords: WP; exchange rate regime; regime transition; regime classification; regime choice; economic growth; foreign currency; intermediate regime; regimes arise; U.S. dollar; Exchange rate regimes; economic performance; Sturzenegger regime distribution; classification regime; regime announcement; exchange rate regime performance; exchange rate regime classification systems; successor regime; de facto regime; emerging market country; Exchange rate arrangements; Emerging and frontier financial markets; Exchange rates; Exchange rate flexibility; Inflation; Global (search for similar items in EconPapers)
Pages: 84
Date: 2003-12-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (112)
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Working Paper: Evolution and Performance of Exchange Rate Regimes (2004) 
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