NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Exchange Rate Regime Durability and Performance in Developing Countries Versus Advanced Economies

Aasim M. Husain, Ashoka Mody, Kenneth S. Rogoff

NBER Working Paper No. 10673
Issued in August 2004
NBER Program(s):   EFG   IFM   ME

Drawing on new data and advances in exchange rate regimes' classification, we find that countries appear to benefit by having increasingly flexible exchange rate systems as they become richer and more financially developed. For developing countries with little exposure to international capital markets, pegs are notable for their durability and relatively low inflation. In contrast, for advanced economies, floats are distinctly more durable and also appear to be associated with higher growth. For emerging markets, our results parallel the Baxter and Stockman classic exchange regime neutrality result, though pegs are the least durable and expose countries to higher risk of crisis.

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Document Object Identifier (DOI): 10.3386/w10673

Published: Husain, Aasim M., Ashoka Mody and Kenneth S. Rogoff. "Exchange Rate Regime Durability And Performance In Developing Versus Advanced Economies," Journal of Monetary Economics, 2005, v52(1,Jan), 35-64.

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