The Importance of the Exchange Rate Regime in Limiting Misalignment
AbstractSummary This paper explores how the choice of a country's exchange rate regime may affect exchange rate misalignment for developing and developed countries. A measure of misalignment is obtained by using a panel cointegration vector estimator. This paper finds that for developing countries, an intermediate exchange rate regime (a regime falling somewhere between a pure float and a hard peg) is most effective in preventing exchange rate misalignment. Additionally, the choice of an exchange rate regime as a means to limit misalignment matters for developing countries, but does not seem to matter for developed countries.
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Bibliographic InfoArticle provided by Elsevier in its journal World Development.
Volume (Year): 37 (2009)
Issue (Month): 10 (October)
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Web page: http://www.elsevier.com/locate/worlddev
equilibrium exchange rates exchange rate regime misalignment developing countries;
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