To Peg or Not to Peg
AbstractThis paper proposes a template for assessing whether or not a country''s economic and financial characteristics make it an appropriate candidate for a pegged exchange rate regime. The template employs quantifiable measures of attributes-trade orientation, financial integration, economic diversification, macroeconomic stabilization, credibility, and "fear-offloating" type effects-that have been identified in the literature as key potential determinants of regime choice. To illustrate, the template is applied to Kazakhstan and Pakistan. The results indicate a fairly strong case against a pegged regime in Pakistan. The implications for Kazakhstan are mixed, although changes in that economy in recent years strengthen the case against a peg.
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Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 06/54.
Date of creation: 01 Feb 2006
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-07-02 (All new papers)
- NEP-CBA-2006-07-02 (Central Banking)
- NEP-FDG-2006-07-02 (Financial Development & Growth)
- NEP-FMK-2006-07-02 (Financial Markets)
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