Exchange Rate Regime Durability and Performance in Developing Countries Versus Advanced Economies
AbstractDrawing on new data and advances in exchange rate regimes' classification, we find that countries appear to benefit by having increasingly flexible exchange rate systems as they become richer and more financially developed. For developing countries with little exposure to international capital markets, pegs are notable for their durability and relatively low inflation. In contrast, for advanced economies, floats are distinctly more durable and also appear to be associated with higher growth. For emerging markets, our results parallel the Baxter and Stockman classic exchange regime neutrality result, though pegs are the least durable and expose countries to higher risk of crisis.
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Date of creation: Aug 2004
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Find related papers by JEL classification:
- F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-08-31 (All new papers)
- NEP-CBA-2004-08-31 (Central Banking)
- NEP-CWA-2004-08-31 (Central & Western Asia)
- NEP-IFN-2004-08-31 (International Finance)
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