Exchange Rate Management and Crisis Susceptibility A Reassessment

This paper revisits the bipolar prescription for exchange rate regime choice and asks two questions: are the poles of hard pegs and pure floats still safer than the middle? And where to draw the line between safe floats and risky intermediate regimes? Our findings, based on a sample of 50 EMEs over...

Full description

Bibliographic Details
Main Author: Ghosh, Atish
Other Authors: Ostry, Jonathan, Qureshi, Mahvash
Format: eBook
Language:English
Published: Washington, D.C. International Monetary Fund 2014
Series:IMF Working Papers
Online Access:
Collection: International Monetary Fund - Collection details see MPG.ReNa
LEADER 01937nmm a2200253 u 4500
001 EB002083117
003 EBX01000000000000001223207
005 00000000000000.0
007 cr|||||||||||||||||||||
008 220928 ||| eng
020 |a 9781484383971 
100 1 |a Ghosh, Atish 
245 0 0 |a Exchange Rate Management and Crisis Susceptibility  |b A Reassessment  |c Atish Ghosh, Jonathan Ostry, Mahvash Qureshi 
260 |a Washington, D.C.  |b International Monetary Fund  |c 2014 
300 |a 46 pages 
700 1 |a Ostry, Jonathan 
700 1 |a Qureshi, Mahvash 
041 0 7 |a eng  |2 ISO 639-2 
989 |b IMF  |a International Monetary Fund 
490 0 |a IMF Working Papers 
028 5 0 |a 10.5089/9781484383971.001 
856 4 0 |u https://elibrary.imf.org/openurl?genre=journal&issn=1018-5941&volume=2014&issue=011  |x Verlag  |3 Volltext 
082 0 |a 330 
520 |a This paper revisits the bipolar prescription for exchange rate regime choice and asks two questions: are the poles of hard pegs and pure floats still safer than the middle? And where to draw the line between safe floats and risky intermediate regimes? Our findings, based on a sample of 50 EMEs over 1980-2011, show that macroeconomic and financial vulnerabilities are significantly greater under less flexible intermediate regimes-including hard pegs-as compared to floats. While not especially susceptible to banking or currency crises, hard pegs are significantly more prone to growth collapses, suggesting that the security of the hard end of the prescription is largely illusory. Intermediate regimes as a class are the most susceptible to crises, but "managed floats"-a subclass within such regimes-behave much more like pure floats, with significantly lower risks and fewer crises. "Managed floating," however, is a nebulous concept; a characterization of more crisis prone regimes suggests no simple dividing line between safe floats and risky intermediate regimes