Fear of floating

Carmen Reinhart and Guillermo Calvo

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.”

Keywords: exchange; rates; pegs; reserves; interest; rates; credibility; fear; of; floating (search for similar items in EconPapers)
JEL-codes: E42 F30 F31 (search for similar items in EconPapers)
Date: 2002-05
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1504)

Published in Quarterly Journal of Economics 2.117(2002): pp. 379-408

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Related works:
Journal Article: Fear of Floating (2002)
Working Paper: Fear of Floating: Exchange Rate Flexibility Indices (2001)
Working Paper: Fear of Floating (2000)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:14000

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