Fear of Floating and Pegging: A Simultaneous Choice Model of De Jure and De Facto Exchange Rate Regimes
Jürgen Von Hagen
University of Bonn - Institute of Economic Policy; Centre for Economic Policy Research (CEPR)
University of Bonn - Center for European Integration Studies (ZEI)
CEPR Discussion Paper No. DP7006
We present an analysis of the determinants of de jure and de facto exchange rate regimes based on a panel probit model with simultaneous equations. The model is estimated using simulation-based maximum likelihood methods. The empirical results suggest a triangular structure of the model such that the choice of de facto regimes depends on the choice of de jure regimes but not vice versa. This gives rise to a novel interpretation of regime discrepancies.
Number of Pages in PDF File: 32
Keywords: de facto exchange rate regimes, developing countries, simultaneous equations
JEL Classification: C35, F33, F41working papers series
Date posted: December 18, 2008
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