Classifying exchange rate regimes: Deeds vs. words

Abstract

Most of the empirical literature on the relative merits of alternative exchange rate regimes uses the IMF de jure classification based on the regime that governments claim to have, abstracting from the fact that many countries that in theory follow flexible regimes intervene in the exchange market to an extent that in practice makes them indistinguishable from fixed rate regimes, and vice versa. To address this problem, in this paper we construct a de facto classification of exchange rate regimes. Using cluster analysis techniques, we group different regimes according to their behavior along three classification dimensions: the nominal exchange rate, changes in the nominal exchange rate, and international reserves. We compare our results with the IMF classification, and discuss the main discrepancies. The paper provides an exchange rate classification for each country and each year during the period 1990-1998 which is readily available for downloading at

Conservative Central Banks and Nominal Growth, Exchange Rate and Inflation Targets

“… 2. Levy‐Yeyati and Sturzenegger (2005) also find that countries that claim to float act from time to time to stabilize their exchange rates. In an investigation of whether central banks respond to exchange rate movements, Lubik and Schorfheide (2006) report that the central banks of Canada and the United Kingdom include a nominal exchange rate in their policy rules, while the central banks of Australia and New Zealand do not. …”

Le choix d'un régime de change dans les pays émergents et en développement peut-il être optimal en dehors des solutions bipolaires ?

“…3 Les principaux déterminants des régimes de change sont fondés sur cinq approches principales : les zones monétaires optimales, la nature des chocs, la crédibilité des autorités, la trilogie impossible et l'effet de bilan lié aux engagements en devises des agents publics et privés. Levy-Yeyati, Sturzenegger et Reggio [2006] trouvent pour un échantillon de 183 pays sur la période 1974-1999 que les approches en termes de ZMO, de trilogie impossible et d'effets de bilan sont particulièrement pertinentes pour expliquer le choix des régimes de change. Von Hagen et Zhou [2004] montrent que les critères des ZMO sont pertinents pour un échantillon de plus de 100 pays en développement, pays émergents et pays en transition.…”

The European periphery during the crisis: fix or float?

“…2 Cf Reinhart and Rogoff (2004). orLevy-Yeyati and Sturzenegger (2005) for differences between de facto and de jure ERRs. 3 Reliable data for many Eastern European countries are available only since the mid-1990s.…”