Evolution and Performance of Exchange Rate Regimes

By Aasim M. Husain, A. Mody, N. Oomes, Robin Brooks, Kenneth S. Rogoff. Social Science Research Network, 2003

324 citations recorded by the source corpus.

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.

Subfields: Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/7a485d3f6571ba42946b64ecea99132f0e3f402e

Citations in the corpus

• Monetary Transmission in Low Income Countries (2010, unknown): “They used the “narrative approach” of Romer and Romer (1990) (see also De Fiore (1998) and Morsink and Bayoumi (1999)) to identify focal episodes of monetary tightening by the South African Reserve Bank (because Namibia maintains a currency board pegged to the South African rand) and performed a dyn”
• A Tie That Binds: Revisiting the Trilemma in Emerging Market Economies (2017, unknown): “8 Our paper is thus also related to the voluminous literature investigating the “neutrality” of the nominal exchange rate regime, which has produced mixed findings on the relevance of the regime for macroeconomic outcomes such as trade, output, and inflation (e.g., Baxter and Stockman, 1989; Rogoff ”
• Exchange rate regime durability and performance in developing versus advanced economies (2005, unknown): “, with pegged or nearly pegged regimes, the likelihood of financial crises is high, reflecting the inability to adapt to changed circumstances, the incentives of entrepreneurs and financial agents to undertake risky activities on the presumption that exchange rates will not change, and speculative p”
• Exchange Rate Management and Crisis Susceptibility: A Reassessment (2014, unknown): “This is consistent with the finding of Rogoff and others (2004) who, using RR’s classification, also find that banking crisis are more likely under managed floats than free floats.”
• The Empirics of Foreign Exchange Intervention in Emerging Market Countries: The Cases of Mexico and Turkey (2004, unknown): “In many countries, intervention remains important even after moving to managed and independently floating exchange rates from various forms of pegs (Bubula and Otker-Robe, 2002, and Reinhart and Rogoff, 2003).”