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Are Fixed Exchange Rates Still a Mirage?

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  • Michael Bleaney
  • Mo Tian

Abstract

In the twenty-first century, pegged exchange rates have become increasingly fixed: parity changes have become significantly rarer than in the 1980s and 1990s. Analysis of what triggers parity changes suggests that the high frequency of parity changes in the late twentieth century reflected the inflationary conditions of the time rather than a permanent shift associated with financial globalization.

Suggested Citation

  • Michael Bleaney & Mo Tian, 2017. "Are Fixed Exchange Rates Still a Mirage?," Discussion Papers 2017/05, University of Nottingham, Centre for Finance, Credit and Macroeconomics (CFCM).
    • Handle: RePEc:not:notcfc:17/05
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    File URL: https://www.nottingham.ac.uk/cfcm/documents/papers/cfcm-2017-05.pdf
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    References listed on IDEAS

    as
    1. Chinn, Menzie D. & Ito, Hiro, 2006. "What matters for financial development? Capital controls, institutions, and interactions," Journal of Development Economics, Elsevier, vol. 81(1), pages 163-192, October.
    2. Michael Bleaney & Mo Tian, 2017. "Measuring exchange rate flexibility by regression methods," Oxford Economic Papers, Oxford University Press, vol. 69(1), pages 301-319.
    3. Maurice Obstfeld & Kenneth Rogoff, 1995. "The Mirage of Fixed Exchange Rates," Journal of Economic Perspectives, American Economic Association, vol. 9(4), pages 73-96, Fall.
    4. Stanley Fischer, 2001. "Exchange Rate Regimes: Is the Bipolar View Correct?," Journal of Economic Perspectives, American Economic Association, vol. 15(2), pages 3-24, Spring.
    5. Klein, Michael W. & Shambaugh, Jay C., 2008. "The dynamics of exchange rate regimes: Fixes, floats, and flips," Journal of International Economics, Elsevier, vol. 75(1), pages 70-92, May.
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    Keywords

    exchange rates regimes; inflation; capital flows;
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