Fear of Floating

64 Pages Posted: 8 Dec 2016 Last revised: 22 Dec 2016

See all articles by Carmen Reinhart

Carmen Reinhart

Harvard University

Guillermo A. Calvo

Columbia University - School of International & Public Affairs (SIPA); National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: november 8, 2000

Abstract

Many emerging market countries have suffered financial crises. One view blames soft pegs for these crises. Adherents of this view suggest that countries move to corner solutions—hard pegs or floating exchange rates. We analyze the behavior of exchange rates, reserves, and interest rates to assess whether there is evidence that country practice is moving toward corner solutions. We focus on whether countries that claim they are floating are indeed doing so. We find that countries that say they allow their exchange rate to float mostly do not—there seems to be an epidemic case of "fear of floating."

Keywords: reserves, exchange rates, fear of floating, central banks, interest rates

JEL Classification: E58, F31, F33, F41

Suggested Citation

Reinhart, Carmen and Calvo, Guillermo A., Fear of Floating (november 8, 2000). Available at SSRN: https://ssrn.com/abstract=2882527 or http://dx.doi.org/10.2139/ssrn.2882527

Carmen Reinhart (Contact Author)

Harvard University ( email )

79 John F. Kennedy Street
Cambridge, MA 02138
United States

Guillermo A. Calvo

Columbia University - School of International & Public Affairs (SIPA) ( email )

420 West 118th Street
New York, NY 10027
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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