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- Title
How to exit from fixed exchange rate regimes?
- Authors
Asici, Ahmet Atil; Ivanova, Nadezhda; Wyplosz, Charles
- Abstract
This paper improves upon the recently developed literature on exits from fixed exchange rate regimes in three ways: (1) It allows for two indicators for post-exit macroeconomic conditions, the change in the exchange rate and the change in the output gap; (2) it tests whether the distinction between orderly and disorderly exit is statistically justified, and concludes that it is not; (3) it deals with the sample selection problem. The results, subject to extensive sensitivity analysis, suggest that post-exits are better when depegging occurs in good macroeconomic conditions — an unnatural move for most policymakers — when world interest rates decline and in the presence of capital controls. Importantly, ‘good’ macroeconomic policies do not seem to help with post-exit performance. Copyright © 2007 John Wiley & Sons, Ltd.
- Subjects
INTEREST rate futures; INTEREST rate parity theorem; MONETARY policy; FOREIGN exchange rates; FOREIGN exchange accounting; FOREIGN exchange; MONEY supply; ECONOMIC policy; GOVERNMENT policy
- Publication
International Journal of Finance & Economics, 2008, Vol 13, Issue 3, p219
- ISSN
1076-9307
- Publication type
Article
- DOI
10.1002/ijfe.340