Evolution and Performance of Exchange Rate Regimes

84 Pages Posted: 15 Feb 2006

See all articles by Kenneth Rogoff

Kenneth Rogoff

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

Aasim Husain

International Monetary Fund (IMF) - Research Department

Ashoka Mody

International Monetary Fund (IMF) - Research Department

Robin Brooks

International Monetary Fund (IMF) - Financial Studies Division

Nienke Oomes

International Monetary Fund (IMF)

Date Written: December 2003

Abstract

Using recent advances in the classification of exchange rate regimes, this paper finds no support for the popular bipolar view that countries will tend over time to move to the polar extremes of free float or rigid peg. Rather, intermediate regimes have shown remarkable durability. The analysis suggests that as economies mature, the value of exchange rate flexibility rises. For countries at a relatively early stage of financial development and integration, fixed or relatively rigid regimes appear to offer some anti-inflation credibility gain without compromising growth objectives. As countries develop economically and institutionally, there appear to be considerable benefits to more flexible regimes. For developed countries that are not in a currency union, relatively flexible exchange rate regimes appear to offer higher growth without any cost in credibility.

Keywords: Exchange rate regimes economic performance

JEL Classification: F4 F33 E3

Suggested Citation

Rogoff, Kenneth S. and Husain, Aasim and Mody, Ashoka and Brooks, Robin and Oomes, Nienke, Evolution and Performance of Exchange Rate Regimes (December 2003). IMF Working Paper, Vol. , pp. 1-84, 2003. Available at SSRN: https://ssrn.com/abstract=880953

Kenneth S. Rogoff (Contact Author)

Harvard University - Department of Economics ( email )

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Aasim Husain

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

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Ashoka Mody

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

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Washington, DC 20431
United States
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HOME PAGE: http://www.amody.com

Robin Brooks

International Monetary Fund (IMF) - Financial Studies Division ( email )

700 19th Street N.W.
Washington, DC 20431
United States

Nienke Oomes

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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