How Do Countries Choose their Exchange Rate Regime?

This paper investigates the determinants of exchange rate regime choice in 93 countries during 1990-98. Cross-country analysis of variations in international reserves and nominal exchange rates shows that (i) truly fixed pegs and independent floats differ significantly from other regimes and (ii) si...

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Bibliographic Details
Main Author: Poirson, Hélène
Format: eBook
Language:English
Published: Washington, D.C. International Monetary Fund 2001
Series:IMF Working Papers
Subjects:
Online Access:
Collection: International Monetary Fund - Collection details see MPG.ReNa
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651 4 |a United States 
653 |a Exchange rate arrangements 
653 |a International Monetary Arrangements and Institutions 
653 |a Currency; Foreign exchange 
653 |a Value of Firms 
653 |a Open Economy Macroeconomics 
653 |a Economic Development: General 
653 |a Foreign Exchange 
653 |a Conventional peg 
653 |a Financial risk management 
653 |a Capital and Ownership Structure 
653 |a Goodwill 
653 |a Exchange rate flexibility 
653 |a Banks and Banking 
653 |a Financial regulation and supervision 
653 |a Financial Risk and Risk Management 
653 |a Exchange rates 
653 |a Financing Policy 
653 |a Exchange rate risk 
653 |a Financial services law & regulation 
653 |a Foreign exchange 
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520 |a This paper investigates the determinants of exchange rate regime choice in 93 countries during 1990-98. Cross-country analysis of variations in international reserves and nominal exchange rates shows that (i) truly fixed pegs and independent floats differ significantly from other regimes and (ii) significant discrepancies exist between de jure and de facto flexibility. Regression results highlight the influence of political factors (political instability and government temptation to inflate), adequacy of reserves, dollarization (currency substitution), exchange rate risk exposure, and some traditional optimal currency area criteria, in particular capital mobility, on exchange rate regime selection