Reinhart, Carmen (2002): A Modern History of Exchange Rate Arrangements: Parallel Markets and Dual and Multiple Exchange Rates.
Download (189kB) | Preview
There are cases where the parallel (or secondary) exchange rate applies only to a few limited transactions. An example is the “switch pound” in the United Kingdom during September 1950 through April 1967. However, it is not unusual for dual or parallel markets (legal or otherwise) to account for the lion’s share of transactions with the official rate being little more than symbolic. The official rate typically diminishes in importance when the gap between the official and market-determined rate widens. To provide a sense of the comparative relevance of the dual or parallel market we proceed along two complimentary dimensions. First, we include a qualitative description in the country-specific chronologies of what transactions take place in the official market versus the secondary market. Second, we develop a quantitative measure of the potential size of the leakages into dual or parallel exchange markets. We classify episodes where there are dual/parallel markets into three tiers according to the level (in percent) of the parallel market premium: low (below 10 percent), moderate (10 percent or above but below 50), and high (50 percent and above). For the episodes of dual/parallel markets, we provide information about which category each episode falls in (by calculating the average premium for the duration of the episode). This is background material for "The Modern History of Exchange Rate Arrangements: A Reinterpretation"
|Item Type:||MPRA Paper|
|Original Title:||A Modern History of Exchange Rate Arrangements: Parallel Markets and Dual and Multiple Exchange Rates|
|English Title:||A Modern History of Exchange Rate Arrangements: Parallel Markets and Dual and Multiple Exchange Rates|
|Keywords:||Exchange rate, dual markets, parallel markets, capital controls, exports, history|
|Subjects:||F - International Economics > F3 - International Finance > F32 - Current Account Adjustment ; Short-Term Capital Movements
F - International Economics > F3 - International Finance > F31 - Foreign Exchange
|Depositing User:||Carmen Reinhart|
|Date Deposited:||06. Feb 2009 06:27|
|Last Modified:||13. Feb 2013 19:28|
Baxter, Marianne, and Alan Stockman, (1989). “Business Cycle and Exchange Rate Regime: Some International Evidence,” Journal of Monetary Economics Vol. 23, 377-400.
Calvo, Guillermo, and Carmen M. Reinhart, (2002). “Fear of Floating,” Quarterly Journal of Economics, forthcoming.
Côté, Agathe, (1994). “Exchange Rate Volatility and Trade: A Survey,” Bank of Canada Working Paper 94-5.
Dedola, Luca, and Sylvain Leduc, (2001). “Why is the Business Cycle Behavior of Fundamentals Alike Across Exchange Rate Regimes? Oesterreichische Nationalbank Working Paper 53.
Easterly, William, (2001). The Elusive Quest for Growth (MIT Press: Cambridge, MA).
Flood, Robert P., and Andrew K. Rose, (1995). “Fixing Exchange Rates: A Virtual Quest for Fundamentals,” Journal of Monetary Economics.
Frankel, Jeffrey A., and Andrew K. Rose, (1996). Currency Crashes in Emerging Markets: An Empirical Treatment, Journal of International Economics, Vol. 41, No.3/4, November, 351-368.
Glick, Reuven, (2000). “Fixed or Floating: Is It Still Possible to Manage in the Middle?” Pacific Basin Working Paper No. PB00-02, Federal Reserve Bank of San Francisco.
Gosh, Atish, Anne-Marie Gulde, Jonathan Ostry, and Holger Wolfe, (1997). “Does the Nominal Exchange Rate Regime Matter?, NBER Working Paper No. 5874, January.
International Monetary Fund, various issues, (1949-1978). Annual Report on Exchange Restrictions (International Monetary Fund: Washington DC)
International Monetary Fund, various issues, (1979-2001). Annual Report on Exchange Arrangements and Exchange Restrictions
International Currency Analysis, World Currency Yearbook (International Currency Analysis: New York).
Levy-Yeyati, Eduardo, and Federico Sturzeneger, (2002). “Classifying Exchange Rate Regimes: Deeds vs. Words,” mimeograph, Universidad Torcuato Di Tella.
Mason, Stephen F., (1962). A History of the Sciences, (Collier Books: New York).
Masson, Paul R., (2000). “Exchange Rate Regime Transitions,” Journal of Development Economics Vol. 64, 571-586.
Pick, Franz, various issues, (1955-1982). Pick’s Currency Yearbook (Pick Publishing Corporation, New York).
Pick, Franz, various issues, (1945-1955). World Currency Reports (Pick Publishing Corporation, New York).
Pick, Franz, and René Sédillot (1971). All the Monies of the World: A Chronicle of Currency Values, (Pick Publishing Corporation, New York).
Reinhart, Carmen M., and Kenneth S. Rogoff (2002). “Background Material to A Modern History of Exchange Rate Arrangements: A Reinterpretation,” mimeograph, International Monetary Fund, Washington DC.
Wickham, Peter, (2002). “Do Flexible Exchange Rates of Developing Countries Behave Like the Floating Exchange Rates of Industrialized Countries?” IMF Working Paper.