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The Classification and Perfomance of Alternative Exchange-Rate Systems

  • George Tavlas


    (Bank of Greece)

  • Harris Dellas

    (University of Bern)

  • Alan Stockman

    (University of Rochester)

Owing to dissatisfaction with the IMF’s de jure classification of exchange-rate regimes, a substantial literature has emerged presenting de facto classifications of exchange-rate systems and using the latter classifications to compare performances of alternative regimes in terms of key macroeconomic variables. This paper critically reviews the literature on de facto regimes. In particular the paper (1) describes the main methodologies that have been used to construct de facto codings, (2) surveys the empirical literature generated by de facto regime codings, and (3) lays-out the problems inherent in constructing de facto classifications. The empirical literature is found to yield few robust findings. We argue that the as-yet unfulfilled objective of this literature, and the major research agenda for the future in this area, lies in the need of a more thorough investigation of the degree of monetary-policy independence without relying exclusively on movements in exchange rates, an agenda the attainment of which is made especially challenging because of the lack of comprehensive and reliable data on reserves and interest rates.

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Paper provided by Bank of Greece in its series Working Papers with number 90.

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Length: 45 pages
Date of creation: Sep 2008
Date of revision:
Handle: RePEc:bog:wpaper:90
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