Does the Nominal Exchange Rate Regime Matter?
AbstractThe relevance of the exchange rate regime for macroeconomic performance remains a key issue in international macroeconomics. We use a comprehensive dataset covering nine regime-types for one hundred forty countries over thirty years to examine the link between the regime, inflation, and growth. Two sturdy stylized facts emerge. First, inflation is both lower and more stable under pegged regimes, reflecting both slower money supply and faster money demand growth. Second, real volatility is higher under pegged regimes. In contrast, growth varies only slightly across regimes, though investment is somewhat higher and trade growth somewhat lower under pegged regimes. Pegged regimes are thus characterized by lower inflation but more pronounced output volatility.
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Date of creation: Jan 1997
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Other versions of this item:
- Jonathan David Ostry & Anne Marie Gulde & Atish R. Ghosh & Holger C. Wolf, 1995. "Does the Nominal Exchange Rate Regime Matter?," IMF Working Papers 95/121, International Monetary Fund.
- Atish R. Ghosh & Anne-Marie Gulde & Jonathan D. Ostry & Holger C. Wolf, 1997. "Does The Nominal Exchange Rate Regime Matter?," Working Papers 97-09, New York University, Leonard N. Stern School of Business, Department of Economics.
- F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
- F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
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