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Does the exchange rate regime shape currency misalignments in emerging and developing countries?

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  • Carl Grekou

Abstract

Relying on a panel of 73 emerging and developing countries and on de facto exchange rate regimes classification over the 1980-2012 period, we re-examine empirically the relationship between exchange rate regimes and currency misalignments. Overall our results suggest that no exchange rate regime performs better than the others as currency misalignments do not substantially and significantly differ across exchange rate regimes. This finding is in contrast to the different arguments (both theoretical and empirical) in favor or against any particular regime and instead supports the exchange regime neutrality view.

Suggested Citation

  • Carl Grekou, 2016. "Does the exchange rate regime shape currency misalignments in emerging and developing countries?," EconomiX Working Papers 2016-26, University of Paris Nanterre, EconomiX.
    • Handle: RePEc:drm:wpaper:2016-26
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    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions

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