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Evolution of Exchange Rate Regimes


  • Robert P. Flood

    (International Monetary Fund)

  • Jagdeep S. Bhandari

    (International Monetary Fund)

  • Jocelyn P. Horne

    (International Monetary Fund)


Issues relating to the evolution of exchange rate regimes are examined. Empirical regularities concerning the variation over time of real and monetary disturbances and cross-country inflation differentials are first discussed. The paper then develops a model that incorporates these regularities and thereby enables exchange rate regime changes to be viewed as optimal and predictable responses by policymakers to a changing economic environment.

Suggested Citation

  • Robert P. Flood & Jagdeep S. Bhandari & Jocelyn P. Horne, 1989. "Evolution of Exchange Rate Regimes," IMF Staff Papers, Palgrave Macmillan, vol. 36(4), pages 810-835, December.
  • Handle: RePEc:pal:imfstp:v:36:y:1989:i:4:p:810-835

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    References listed on IDEAS

    1. Paul R. Krugman, 1988. "Market-Based Debt-Reduction Schemes," NBER Working Papers 2587, National Bureau of Economic Research, Inc.
    2. Calvo, Guillermo A, 1988. "Servicing the Public Debt: The Role of Expectations," American Economic Review, American Economic Association, vol. 78(4), pages 647-661, September.
    3. Claessens, Stijn, 1990. "The debt laffer curve: Some estimates," World Development, Elsevier, vol. 18(12), pages 1671-1677, December.
    4. Eaton, Jonathan, 1987. "Public Debt Guarantees and Private Capital Flight," World Bank Economic Review, World Bank Group, vol. 1(3), pages 377-395, May.
    5. W. Max Corden, 1988. "An International Debt Facility?," IMF Staff Papers, Palgrave Macmillan, vol. 35(3), pages 401-421, September.
    6. Michael P. Dooley, 1988. "Buy-Backs and Market Valuation of External Debt," IMF Staff Papers, Palgrave Macmillan, vol. 35(2), pages 215-229, June.
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    Cited by:

    1. K. Rudgalvis, 1996. "Establishing a new currency and exchange rate determination: the case of Lithuania," CERT Discussion Papers 9604, Centre for Economic Reform and Transformation, Heriot Watt University.
    2. Masson, Paul R., 2001. "Exchange rate regime transitions," Journal of Development Economics, Elsevier, vol. 64(2), pages 571-586, April.
    3. E. Grilli, 1999. "Some considerations on the reform of the international monetary and financial system," Banca Nazionale del Lavoro Quarterly Review, Banca Nazionale del Lavoro, vol. 52(209), pages 195-237.
    4. Ozkan, F. Gulcin & Sutherland, Alan, 1998. "A currency crisis model with an optimising policymaker," Journal of International Economics, Elsevier, vol. 44(2), pages 339-364, April.
    5. Cavallari, Lilia & Corsetti, Giancarlo, 2000. "Shadow rates and multiple equilibria in the theory of currency crises," Journal of International Economics, Elsevier, vol. 51(2), pages 275-286, August.
    6. E. Grilli, 1999. "Some considerations on the reform of the international monetary and financial system," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 52(209), pages 195-237.
    7. Sergio Rebelo & Carlos A. Vegh, 2006. "When Is It Optimal to Abandon a Fixed Exchange Rate?," NBER Working Papers 12793, National Bureau of Economic Research, Inc.

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