Fear of floating
AbstractMany emerging market countries have suffered financial crises. One view blames soft pegs for these crises. Adherents to that view suggest that countries move to corner solutions--hard pegs or floating exchange rates. We analyze the behavior of exchange rates, reserves, and interest rates to assess whether there is evidence that country practice is moving toward corner solutions. We focus on whether countries that claim they are floating are indeed doing so. We find that countries that say they allow their exchange rate to float mostly do not--there seems to be an epidemic case of “fear of floating.”
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 14000.
Date of creation: May 2002
Date of revision:
Publication status: Published in Quarterly Journal of Economics 2.117(2002): pp. 379-408
exchange rates pegs reserves interest rates credibility fear of floating;
Other versions of this item:
- E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
- F30 - International Economics - - International Finance - - - General
- F31 - International Economics - - International Finance - - - Foreign Exchange
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