IMF Working Papers

Evolution and Performance of Exchange Rate Regimes

By Aasim M. Husain, Ashoka Mody, Nienke Oomes, Robin Brooks, Kenneth Rogoff

December 1, 2003

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Aasim M. Husain, Ashoka Mody, Nienke Oomes, Robin Brooks, and Kenneth Rogoff. Evolution and Performance of Exchange Rate Regimes, (USA: International Monetary Fund, 2003) accessed November 21, 2024
Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

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.

Subject: Emerging and frontier financial markets, Exchange rate arrangements, Exchange rate flexibility, Exchange rates, Financial markets, Foreign exchange, Inflation, Prices

Keywords: Classification regime, De facto regime, Economic growth, Economic performance, Emerging and frontier financial markets, Emerging market country, Exchange rate arrangements, Exchange rate flexibility, Exchange rate regime, Exchange rate regime classification systems, Exchange rate regime performance, Exchange rate regimes, Exchange rates, Foreign currency, Global, Inflation, Intermediate regime, Regime announcement, Regime choice, Regime classification, Regime transition, Regimes arise, Sturzenegger regime distribution, Successor regime, U.S. dollar, WP

Publication Details

  • Pages:

    84

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2003/243

  • Stock No:

    WPIEA2432003

  • ISBN:

    9781451875843

  • ISSN:

    1018-5941