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The choice of exchange rate regime: "An empirical analysis for transition economies"

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Author Info
Jürgen von Hagen
Jizhong Zhou

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Abstract

We analyze the choice of exchange rate regimes of the 25 transition economies in Europe and the CIS after 1990. The empirical results show that the traditional Optimum Currency Area considerations provide relevant guidance for the regime choices in these countries. Moreover, regime choices are influenced by inflation rates, cumulative inflation differentials, and international reserves sufficiency. That is, macroeconomic stabilization and the ability to commit to exchange rate pegs also play important roles. Large government deficits have ambiguous effects; they increase the likelihood of moving from flexible to intermediate regimes as well as that of moving from fixed to intermediate ones. Copyright (c) The European Bank for Reconstruction and Development, 2005.

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Article provided by The European Bank for Reconstruction and Development in its journal Economics of Transition.

Volume (Year): 13 (2005)
Issue (Month): 4 (October)
Pages: 679-703
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Handle: RePEc:bla:etrans:v:13:y:2005:i:4:p:679-703

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  1. Monzur Hossain, 2008. "Exchange Rate Regime Transition Dynamics In East Asia," AIUB Bus Econ Working Paper Series AIUB-BUS-ECON-2008-03, American International University-Bangladesh, Office of Research and Publications (ORP), revised Jan 2008. [Downloadable!]
  2. Eduard Hochreiter & Klaus Schmidt-Hebbel & Georg Winckler, 2002. "Monetary Union: European Lessons, Latin American Prospects," Working Papers Central Bank of Chile 167, Central Bank of Chile. [Downloadable!]
    Other versions:
  3. von Hagen, Jürgen & Zhou, Jizhong, 2004. "The Choice of Exchange Rate Regime in Developing Countries: A Multinational Panel Analysis," CEPR Discussion Papers 4227, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  4. Mehmet Guclu, 2008. "The Determinants of Exchange Rate Regimes in Emerging Market Economies," Working Papers 0806, Ege University, Department of Economics. [Downloadable!]
  5. Frömmel, Michael & Schobert, Franziska, 2006. "Monetary Policy Rules in Central and Eastern Europe," Diskussionspapiere der Wirtschaftswissenschaftlichen Fakultät der Universität Hannover dp-341, Universität Hannover, Wirtschaftswissenschaftliche Fakultät. [Downloadable!]
  6. Carsten Detken & Vitor Gaspar, 2003. "Maintaining price stability under free-floating: a fearless way out of the corner?," Working Paper Series 241, European Central Bank. [Downloadable!]
  7. von Hagen, Jürgen & Zhou, Jizhong, 2006. "Fear of Floating and Fear of Pegging: An Empirical Analysis of De Facto Exchange Rate Regimes in Developing Countries," CEPR Discussion Papers 5530, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  8. Fabio M. Natalucci & Federico Ravenna, 2002. "The road to adopting the euro: monetary policy and exchange rate regimes in EU candidate countries," International Finance Discussion Papers 741, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
    Other versions:
  9. Dimitrios A. Sideris, 2007. "Foreign Exchange Intervention and Equilibrium Real Exchange Rates," Working Papers 56, Bank of Greece. [Downloadable!]
  10. Frank W. Agbola & Chartri Kunanopparat, 2005. "Determinants of exchange rate practices: some empirical evidence from Thailand," Applied Economics, Taylor and Francis Journals, vol. 37(7), pages 807-816, April. [Downloadable!] (restricted)
  11. Agnes Benassy-Quere & Benoit Cœure, 2002. "The Survival of Intermediate Exchange Rate Regimes," Working Papers 2002-07, CEPII research center. [Downloadable!]
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