To Fix or to Float from Perspective of Output Volatility and Vulnerability to Crisis
CEA Journal of Economics, Vol. 3, No. 1, pp. 9-24
16 Pages Posted: 12 Jul 2008
Date Written: July 12, 2008
The aim of this paper is to offer some less-explored theoretical insights into the exchange rate economics. The debate of whether to fix or to float is still lively, even in the context of output volatility under alternative exchange rate regimes; specifically, the effect of the exchange rate regime on output volatility remains unclear. The very scarce number of studies found divergent results: none of those are overwhelming and none give clear notion of how the regime affects output volatility. The latter might be due to the fact that the exchange-rate regime is not related to output volatility neither, but also due to the fact that the very limited number of studies on this issue do not comprehend it in a coherent and serious manner. Consequently, the issue remains and empirical problem and asks for further empirical investigation.
Keywords: exchange rate regime, output volatility, peg exit
JEL Classification: E42, F31
Suggested Citation: Suggested Citation