Reinhart, Carmen (2001): Fear of Floating: Exchange Rate Flexibility Indices.
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Many emerging market countries have suffered financial crises. One view blames soft pegs for these crises. Adherents to that view suggest that countries move to corner solutions--hard pegs or floating exchange rates. We analyze the behavior of exchange rates, reserves, and interest rates to assess whether there is evidence that country practice is moving toward corner solutions. We focus on whether countries that claim they are floating are indeed doing so. We find that countries that say they allow their exchange rate to float mostly do not--there seems to be an epidemic case of “fear of floating.” The exchange rate flexibility indices calculated here provide and indication of the extent of "fear of floating."
|Item Type:||MPRA Paper|
|Original Title:||Fear of Floating: Exchange Rate Flexibility Indices|
|English Title:||Fear of Floating: Exchange Rate Flexibility Indices|
|Keywords:||Exchange rates, pegs, reserves, crises|
|Subjects:||F - International Economics > F3 - International Finance
F - International Economics > F3 - International Finance > F31 - Foreign Exchange
|Depositing User:||Carmen Reinhart|
|Date Deposited:||06. Feb 2009 06:32|
|Last Modified:||16. Feb 2013 03:32|
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