Exchange-Rate Regimes and Economic Growth: An Empirical Evaluation
Working Papers in International Economics and Finance 14-01
11 Pages Posted: 24 Feb 2014
Date Written: February 6, 2014
Based on a dataset of 123 economies, this paper empirically investigates the relation between exchange-rate regimes and economic growth. We find that growth performance is best under intermediate exchange rate regimes, while the smallest growth rates are associated with flexible exchange rates. Nevertheless, this conclusion is tempered when we analyze the countries by income level: even though countries that adopt intermediate exchange-rate regimes are characterized by higher economic growth, the higher the level of income, less difference in growth performance across exchange rate regimes.
Keywords: Exchange rate regime, economic growth
JEL Classification: E42, F31
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