Evolution and Performance of Exchange Rate Regimes
84 Pages Posted: 15 Feb 2006
Date Written: December 2003
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: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
The Modern History of Exchange Rate Arrangements: A Reinterpretation
By Carmen Reinhart and Kenneth Rogoff
Fixing Exchange Rates: A Virtual Quest for Fundamentals
By Robert P. Flood and Andrew Kenan Rose
The Mirage of Fixed Exchange Rates
By Maurice Obstfeld and Kenneth Rogoff
Classifying Exchange Rate Regimes: Deeds vs. Words
Exchange Rate Regimes: Is the Bipolar View Correct?
No Single Currency Regime is Right for All Countries or at All Times
The Capitalization of Income Streams and the Effects of Open Market Policy Under Fixed Exchange Rates