TY  - JOUR
AU  - Dubas,Justin M.
AU  - Lee,Byung-Joo
AU  - Mark,Nelson C.
TI  - Effective Exchange Rate Classifications and Growth
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 11272
PY  - 2005
Y2  - April 2005
UR  - http://www.nber.org/papers/w11272
L1  - http://www.nber.org/papers/w11272.pdf
N1  - Author contact info:
Justin Dubas
University of Notre Dame
Dept. of Economics
434 Flanner Hall
Notre Dame, IN 46556
E-Mail: Justin.M.Dubas.1@nd.edu

Byung-Joo Lee
Dept. of Economics and Econometrics
University of Notre Dame
446 Flanner Hall
Notre Dame, IN 46556
E-Mail: blee@nd.edu

Nelson Mark
Department of Economics and Econometrics
University of Notre Dame
Notre Dame, IN  46556
Tel: 574/631-0518
Fax: 574/631-4783
E-Mail: nmark@nd.edu
AB  - We propose an econometric procedure for obtaining de facto exchange rate regime classifications which we apply to study the relationship between exchange rate regimes and economic growth. Our classification method models the de jure regimes as outcomes of a multinomial logit choice problem conditional on the volatility of a country's effective exchange rate, a bilateral exchange rate and international reserves. An `effective' de facto exchange rate regime classification is then obtained by assigning country-year observations to the regime with the highest predictive probability obtained from the estimation problem. An econometric investigation into the relationship between exchange rate regimes and GDP growth finds that growth is higher under stable currency-value regimes. Significant asymmetric effects on country growth from not doing what is said are found for nonindustrialized countries. Countries that exhibit `fear of floating' experience significantly higher growth.
ER  -