Exchange Rate Regime Transitions

By Paul R. Masson. Social Science Research Network, 2000

146 citations recorded by the source corpus.

The hollowing-out, or two poles hypothesis is tested in the context of a Markov chain model of exchange rate transitions. In particular, two versions of the hypothesis - that hard pegs are an absorbing state, or that fixes and floats form a closed set, with no transitions to intermediate regimes - are tested using two alternative classifications of regimes. While there is some support for the lack of exits from hard pegs (i.e., that they are an absorbing state), the data generally indicate that the intermediate cases will continue to constitute a sizable proportion of actual exchange rate regimes.

Subfields: Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/379de948a9dc9ff55fdb769461d7e29a0fb47b6e

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Citations in the corpus

The dynamics of exchange rate regimes: Fixes, floats, and flips (2008, background): “These cross-section statistics may be more relevant than spell-based statistics 21 Research by Masson (2001), Masson and Ruge-Muricia (2005) and Eichengreen and Razo-Garcia (2006) is related to this analysis, although these papers focus on whether the international monetary system is moving toward…”
Monetary Policy Rules for Financially Vulnerable Economies (2003, unknown): “However, it's hard to argue that the fiscal dominance is 1 The hollowing out hypothesis is tested using different methodologies in Frankel et. al (2000) and Masson (2000).”
The Monetary Geography of Africa (2004, background): “CFA Franc Zone: Intra-Regional Trade and Trade with France, (actual and predicted by gravity model, as a percent of total trade in 1997-98)”
The Classification and Performance of Alternative Exchange-Rate Systems (2008, methodology): “Other recent examples of the use of the codings include studies by Masson (2001), who used both the GGOW coding and the LYS coding to investigate whether a change in the frequency of transitions between regimes has taken place over time; Frankel, Schmukler and Serven (2004), who used the de jure…”
Exchange Rate Management and Crisis Susceptibility: A Reassessment (2014, unknown): “11That is, countries would never revert to an intermediate regime from a hard peg or pure float (Masson, 2000).”
Monetary Policy in Emerging Markets (2010, background): “Empirical studies Edwards (1986) and Acar (2000) found that devaluation in developing countries is contractionary in the first year, but then expansionary when exports and imports have had time to react to the enhanced price competiveness.”