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To Peg or Not to Peg: A Template for Assessing the Nobler

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Author Info
Aasim M. Husain
Abstract

This 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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Paper provided by International Monetary Fund in its series IMF Working Papers with number 06/54.

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Length: 29 pages
Date of creation: 09 Mar 2006
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Handle: RePEc:imf:imfwpa:06/54

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Keywords: Exchange rate regimes ; Pakistan ; Kazakhstan ; Currency pegs ;

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Andrew K. Rose, 2000. "One money, one market: the effect of common currencies on trade," Economic Policy, CEPR, CES, MSH, vol. 15(30), pages 7-46, 04. [Downloadable!] (restricted)
  2. Guillermo A. Calvo & Carmen M. Reinhart, 2002. "Fear Of Floating," The Quarterly Journal of Economics, MIT Press, vol. 117(2), pages 379-408, May. [Downloadable!] (restricted)
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  3. Reinhart, Carmen & Rogoff, Kenneth, 2004. "The modern history of exchange rate arrangements: A reinterpretation," MPRA Paper 14070, University Library of Munich, Germany. [Downloadable!]
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  4. Frankel, Jeffrey, 2003. "A Proposed Monetary Regime for Small Commodity Exporters: Peg the Export Price ('PEP')," International Finance, Blackwell Publishing, vol. 6(1), pages 61-88, Spring. [Downloadable!] (restricted)
    Other versions:
  5. Inci Ötker & Hugh Bredenkamp & A. Javier Hamann & Esteban Jadresic & R. B. Johnston & Paul R. Masson & Barry J. Eichengreen, 1998. "Exit Strategies: Policy Options for Countries Seeking Exchange Rate Flexibility," IMF Occasional Papers 168, International Monetary Fund.
  6. Grace Juhn & Paolo Mauro, 2002. "Long-Run Determinants of Exchange Rate Regimes: A Simple Sensitivity Analysis," IMF Working Papers 02/104, International Monetary Fund. [Downloadable!]
  7. repec:rus:hseeco:181565 is not listed on IDEAS
  8. Sebastian Edwards, 1999. "The Choice of Exchange Rate Regime in Developing and Middle Income Countries," NBER Chapters, in: Changes in Exchange Rates in Rapidly Development Countries: Theory, Practice, and Policy Issues (NBER-EASE volume 7), pages 9-28 National Bureau of Economic Research, Inc. [Downloadable!]
  9. Mohsin S. Khan & Peter Montiel & Bijan B. Aghevli, 1991. "Exchange Rate Policy in Developing Countries: Some Analytical Issues," IMF Occasional Papers 78, International Monetary Fund.
  10. Kenneth Rogoff & Ashoka Mody & Nienke Oomes & Robin Brooks & Aasim M. Husain, 2004. "Evolution and Performance of Exchange Rate Regimes," IMF Occasional Papers 229, International Monetary Fund.
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Gabriel Di Bella & Aurelie Martin & Mark Lewis, 2007. "Assessing Competitiveness and Real Exchange Rate Misalignment in Low-Income Countries," IMF Working Papers 07/201, International Monetary Fund. [Downloadable!]
  2. Bonpasse, Morrison, 2009. "The single global currency - common cents for the world (2008 Edition)," MPRA Paper 14756, University Library of Munich, Germany. [Downloadable!]
    Other versions:
  3. Bonpasse, Morrison, 2006. "The Single Global Currency: Common Cents for the World," MPRA Paper 1175, University Library of Munich, Germany. [Downloadable!]
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