To Float Or Not To Float? Currency Regimes And Growth
One recent line of research on exchange rates is the effect of fixed or floating currencies on long-term growth. One difficulty with such studies is that emerging market countries with certain imbalances and potentially hard-to-observe policy distortions are more likely to choose a fixed exchange rate regime, and thus estimates of the effect of exchange rates on growth are likely to be biased upward in magnitude. Results here indicate that when a measure of domestic distortions and macroeconomic imbalances is added to the model the exchange rate regime at most exacerbates existing distortions, and no longer appears to have an independent, significant effect on growth, contrary to some recent findings.
Volume (Year): 31 (2006)
Issue (Month): 2 (December)
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- Carmen M. Reinhart & Kenneth S. Rogoff, 2004.
"The Modern History of Exchange Rate Arrangements: A Reinterpretation,"
The Quarterly Journal of Economics,
Oxford University Press, vol. 119(1), pages 1-48.
- Carmen M. Reinhart & Kenneth S. Rogoff, 2002. "The Modern History of Exchange Rate Arrangements: A Reinterpretation," NBER Working Papers 8963, National Bureau of Economic Research, Inc.
- Reinhart, Carmen & Rogoff, Kenneth, 2004. "The modern history of exchange rate arrangements: A reinterpretation," MPRA Paper 14070, University Library of Munich, Germany.
- Rudi Dornbusch, 2001. "Fewer Monies, Better Monies," American Economic Review, American Economic Association, vol. 91(2), pages 238-242, May.
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