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To Float or to Fix: Evidence on the Impact of Exchange Rate Regimes on Growth

Author

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  • Eduardo Levy-Yeyati
  • Federico Sturzenegger

Abstract

We study the relationship between exchange rate regimes and economic growth for a sample of 183 countries over the post-Bretton Woods period, using a new de facto classification of regimes based on the actual behavior of the relevant macroeconomic variables. In contrast with previous studies, we find that, for developing countries, less flexible exchange rate regimes are associated with slower growth, as well as with greater output volatility. For industrial countries, regimes do not appear to have any significant impact on growth. The results are robust to endogeneity corrections and a number of alternative specifications borrowed from the growth literature. (JEL F31, F41)

Suggested Citation

  • Eduardo Levy-Yeyati & Federico Sturzenegger, 2003. "To Float or to Fix: Evidence on the Impact of Exchange Rate Regimes on Growth," American Economic Review, American Economic Association, vol. 93(4), pages 1173-1193, September.
  • Handle: RePEc:aea:aecrev:v:93:y:2003:i:4:p:1173-1193
    Note: DOI: 10.1257/000282803769206250
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    References listed on IDEAS

    as
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    More about this item

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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    This item is featured on the following reading lists, Wikipedia, or ReplicationWiki pages:
    1. To Float or to Fix: Evidence on the Impact of Exchange Rate Regimes on Growth (AER 2003) in ReplicationWiki

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