Peterson Institute for International Economics
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Washington, DC 20036
Institutional Affiliation: Peterson Institute for International Economics
NBER Working Papers and Publications
|December 2009||Estimation of De Facto Flexibility Parameter and Basket Weights in Evolving Exchange Rate Regimes|
with : w15620
A new technique for estimating countries' de facto exchange rate regimes synthesizes two approaches. One approach estimates the implicit de facto basket weights in an OLS regression of the local currency value rate against major currency values. Here the hypothesis is a basket peg with little flexibility. The second estimates the de facto degree of exchange rate flexibility by observing how exchange market pressure is allowed to show up. Here the hypothesis is an anchor to the dollar or some other single major currency, but with a possibly substantial degree of exchange rate flexibility around that anchor. It is important to have available a technique that can cover both dimensions: inferring anchor weights and the flexibility parameter. We test the synthesis technique on a variety ...
Published: Jeffrey Frankel & Daniel Xie, 2010.
"Estimation of De Facto Flexibility Parameter and Basket Weights in Evolving Exchange Rate Regimes,"
American Economic Review,
American Economic Association, vol. 100(2), pages 568-72, May.
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