Currency Boards: The Ultimate Fix?

23 Pages Posted: 15 Feb 2006

See all articles by Atish R. Ghosh

Atish R. Ghosh

International Monetary Fund (IMF) - Policy Development and Review Department

Anne-Marie Gulde

International Monetary Fund (IMF)

Date Written: January 1998

Abstract

The growing integration of world capital markets has made it fashionable to argue that only extreme exchange rate regimes are sustainable. Short of adopting a common currency, currency board arrangements represent the most extreme form of exchange rate peg. This paper compares the macroeconomic performance of countries with currency boards to those with other forms of pegged exchange rate regime. Currency boards are indeed associated with better inflation performance, even allowing for potential endogeneity of the choice of regime. Perhaps more surprisingly, this better inflation performance is accompanied by higher output growth.

Keywords: Currency Boards, Fixed Exchange Rates, Inflation, Growth

JEL Classification: F33, F41, F43

Suggested Citation

Ghosh, Atish R. and Gulde, Anne-Marie, Currency Boards: The Ultimate Fix? (January 1998). IMF Working Paper No. 98/8, Available at SSRN: https://ssrn.com/abstract=882224

Atish R. Ghosh (Contact Author)

International Monetary Fund (IMF) - Policy Development and Review Department ( email )

700 19th St. NW
Washington, DC 20431
United States

Anne-Marie Gulde

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

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