Fear of Floating: Exchange Rate Flexibility Indices

Carmen Reinhart

MPRA Paper from University Library of Munich, Germany

Abstract: Many emerging market countries have suffered financial crises. One view blames soft pegs for these crises. Adherents to that view suggest that countries move to corner solutions--hard pegs or floating exchange rates. We analyze the behavior of exchange rates, reserves, and interest rates to assess whether there is evidence that country practice is moving toward corner solutions. We focus on whether countries that claim they are floating are indeed doing so. We find that countries that say they allow their exchange rate to float mostly do not--there seems to be an epidemic case of “fear of floating.” The exchange rate flexibility indices calculated here provide and indication of the extent of "fear of floating."

Keywords: Exchange rates; pegs; reserves; crises (search for similar items in EconPapers)
JEL-codes: F3 F31 (search for similar items in EconPapers)
Date: 2001-10
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Fear of Floating (2002)
Working Paper: Fear of floating (2002)
Working Paper: Fear of Floating (2000)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:13196

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