Exchange Rate Regime Durability and Performance in Developing Countries Versus Advanced Economies

47 Pages Posted: 2 Sep 2004 Last revised: 1 Sep 2010

See all articles by Aasim Husain

Aasim Husain

International Monetary Fund (IMF) - Research Department

Ashoka Mody

International Monetary Fund (IMF) - Research Department

Kenneth Rogoff

Harvard University - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: August 2004

Abstract

Drawing on new data and advances in exchange rate regimes' classification, we find that countries appear to benefit by having increasingly flexible exchange rate systems as they become richer and more financially developed. For developing countries with little exposure to international capital markets, pegs are notable for their durability and relatively low inflation. In contrast, for advanced economies, floats are distinctly more durable and also appear to be associated with higher growth. For emerging markets, our results parallel the Baxter and Stockman classic exchange regime neutrality result, though pegs are the least durable and expose countries to higher risk of crisis.

Suggested Citation

Husain, Aasim and Mody, Ashoka and Rogoff, Kenneth S., Exchange Rate Regime Durability and Performance in Developing Countries Versus Advanced Economies (August 2004). NBER Working Paper No. w10673. Available at SSRN: https://ssrn.com/abstract=579209

Aasim Husain

International Monetary Fund (IMF) - Research Department ( email )

700 19th Street NW
Washington, DC 20431
United States

Ashoka Mody

International Monetary Fund (IMF) - Research Department ( email )

700 19th Street NW
Washington, DC 20431
United States
202-623-9617 (Phone)
202-589-9617 (Fax)

HOME PAGE: http://www.amody.com

Kenneth S. Rogoff (Contact Author)

Harvard University - Department of Economics ( email )

Littauer Center
Room 232
Cambridge, MA 02138
United States
617-495-4022 (Phone)
617-495-7730 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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