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Choosing (And Reneging On) Exchange Rate Regimes

  • Alberto Alesina
  • Alexander Wagner

We use data on announced and actual exchange rate arrangements to ask which countries follow de facto regimes different from their de iure ones, that is, do not do what they say. Our results suggest that countries with poor institutional quality have difficulty in maintaining pegging and abandon it more often. In contrast, countries with relatively good institutions display fear of floating, i. e. they manage more than announced, perhaps to signal their differences from those countries incapable of maintaining promises of monetary stability.

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File URL: http://www.economics.harvard.edu/pub/hier/2003/HIER2008.pdf
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Paper provided by Harvard - Institute of Economic Research in its series Harvard Institute of Economic Research Working Papers with number 2008.

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Date of creation: 2003
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Handle: RePEc:fth:harver:2008
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Web page: http://www.economics.harvard.edu/journals/hier

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