Following the 1997-98 financial turmoil, crisis countries in Asia moved toward either floating or fixed exchange rate systems, superficially consistent with the bipolar view of exchange rate regimes and the "hollow middle" hypothesis. But some observers have claimed that, despite the changes in their de jure exchange rate regimes, the crisis countries' policies have de facto been very similar in the post- and pre-crisis periods. This paper analyzes the evidence and concludes that, except for Malaysia, which adopted a hard peg and imposed capital controls, the other crisis countries are floating more than before, though less than "real" floaters do. The intermediate exchange rate policies pursued by most of the crisis countries during the post-crisis can be justified on second-best arguments.
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Find related papers by JEL classification: F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes
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Guillermo A. Calvo & Carmen M. Reinhart, 2000.
"Fear of Floating,"
NBER Working Papers
7993, National Bureau of Economic Research, Inc.
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