IDEAS home Printed from
   My bibliography  Save this paper

Crisis and Recovery; Role of the Exchange Rate Regime in Emerging Market Countries


  • Charalambos G Tsangarides


This paper examines the role of the exchange rate regime in explaining how emerging market economies fared in the recent global financial crisis, particularly in terms of output losses and growth resilience. After controlling for regime switches during the crisis, using alternative definitions for pegs, and taking account of other likely determinants, we find that the growth performance for pegs was not different from that of floats during the crisis. For the recovery period 2010-11, pegs appear to be faring worse, with growth recovering more slowly than floats. These results suggest an asymmetric effect of the regime during and recovering from the crisis. We also find that proxies of the trade and financial channels are important determinants of growth performance during the crisis, while only the trade channel appears important for the recovery thus far.

Suggested Citation

  • Charalambos G Tsangarides, 2010. "Crisis and Recovery; Role of the Exchange Rate Regime in Emerging Market Countries," IMF Working Papers 10/242, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:10/242

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. Jacob A. Mincer & Victor Zarnowitz, 1969. "The Evaluation of Economic Forecasts," NBER Chapters,in: Economic Forecasts and Expectations: Analysis of Forecasting Behavior and Performance, pages 3-46 National Bureau of Economic Research, Inc.
    2. Berkmen, S. Pelin & Gelos, Gaston & Rennhack, Robert & Walsh, James P., 2012. "The global financial crisis: Explaining cross-country differences in the output impact," Journal of International Money and Finance, Elsevier, vol. 31(1), pages 42-59.
    3. Olivier J. Blanchard & Mitali Das & Hamid Faruqee, 2010. "The Initial Impact of the Crisis on Emerging Market Countries," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 41(1 (Spring), pages 263-323.
    4. Annamaria Kokenyne & Romain M Veyrune & Karl F Habermeier & Harald J Anderson, 2009. "Revised System for the Classification of Exchange Rate Arrangements," IMF Working Papers 09/211, International Monetary Fund.
    5. John B. Taylor, 2009. "The Financial Crisis and the Policy Responses: An Empirical Analysis of What Went Wrong," NBER Working Papers 14631, National Bureau of Economic Research, Inc.
    6. Atish R. Ghosh & Jonathan David Ostry & Charalambos G Tsangarides, 2011. "Exchange Rate Regimes and the Stability of the International Monetary System," IMF Occasional Papers 270, International Monetary Fund.
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Berkmen, S. Pelin & Gelos, Gaston & Rennhack, Robert & Walsh, James P., 2012. "The global financial crisis: Explaining cross-country differences in the output impact," Journal of International Money and Finance, Elsevier, vol. 31(1), pages 42-59.
    2. de Carvalho Filho Irineu E, 2011. "28 Months Later: How Inflation Targeters Outperformed Their Peers in the Great Recession," The B.E. Journal of Macroeconomics, De Gruyter, vol. 11(1), pages 1-46, July.
    3. V. Coudert & C. Couharde & V. Mignon, 2013. "Pegging emerging currencies in the face of dollar swings," Applied Economics, Taylor & Francis Journals, vol. 45(36), pages 5076-5085, December.
    4. Marina Tkalec, 2013. "The Dynamics of Deposit Euroization in European Post-Transition Countries: Evidence from Threshold VAR," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue 1, pages 66-83.
    5. Rudiger Ahrend & Antoine Goujard, 2012. "International Capital Mobility and Financial Fragility - Part 3. How Do Structural Policies Affect Financial Crisis Risk?: Evidence from Past Crises Across OECD and Emerging Economies," OECD Economics Department Working Papers 966, OECD Publishing.
    6. Masahiro Kawai & Shinji Takagi, 2012. "A Proposal for Exchange Rate Policy Coordination in East Asia," Chapters,in: Monetary and Currency Policy Management in Asia, chapter 9 Edward Elgar Publishing.
    7. Masahiro Kawai & Peter J. Morgan & Shinji Takagi (ed.), 2012. "Monetary and Currency Policy Management in Asia," Books, Edward Elgar Publishing, number 14414.
    8. Towbin, Pascal & Weber, Sebastian, 2013. "Limits of floating exchange rates: The role of foreign currency debt and import structure," Journal of Development Economics, Elsevier, vol. 101(C), pages 179-194.
    9. Kosta Josifidis & Jean-Pierre Allegret & Emilija Beker Pucar, 2013. "Adjustment mechanisms and exchange rate regimes in 2004 new EU members during the financial crisis," Post-Communist Economies, Taylor & Francis Journals, vol. 25(1), pages 1-17, March.
    10. Silvia Kirova, 2014. "Currency regimes and macroeconomic indicators of the derogation EU member states from Central and Eastern Europe," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 2, pages 80-99.
    11. Kadia Besart, 2015. "†Fear of Floating†in Albania and Economic Growth," Romanian Economic Journal, Department of International Business and Economics from the Academy of Economic Studies Bucharest, vol. 18(56), pages 19-32, June,.
    12. Shehzad, Choudhry Tanveer & De Haan, Jakob, 2013. "Was the 2007 crisis really a global banking crisis?," The North American Journal of Economics and Finance, Elsevier, vol. 24(C), pages 113-124.


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:imf:imfwpa:10/242. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jim Beardow) or (Hassan Zaidi). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.