scholarly journals Which currency exchange regime for emerging markets?: Corner solutions under question

2007 ◽  
Vol 54 (4) ◽  
pp. 397-427 ◽  
Author(s):  
Jean-Pierre Allegret
Keyword(s):  
Exchange Rate ◽  
Emerging Markets ◽  
Inflation Targeting ◽  
International Institutions ◽  
Exchange Rate Regime ◽  
Exchange Rate Regimes ◽  
Emerging Countries ◽  
Currency Exchange ◽  
Corner Solutions ◽  
Exchange Regime

During the 90s, recurrent exchange rate crises in emerging markets have shown the extreme fragility of soft pegs, the so-called intermediate exchange rate regimes. As a result, numerous academic economists but also International institutions have promoted a new consensus: domestic authorities have to choose their exchange rate regime between only two solutions called corner solutions or extreme regimes: hard pegs or independent floating. This paper questions de relevance of this consensus. We stress the main advantages and costs of each corner solution. We conclude by stressing that intermediate regimes associated to an inflation targeting framework seem a better solution for emerging countries than corner solutions.

Inflation targeting and exchange rate regimes in emerging markets

2018 ◽  
Vol 18 (2) ◽  
Author(s):  
Christian Ebeke ◽  
Armand Fouejieu
Keyword(s):  
Exchange Rate ◽  
Emerging Markets ◽  
Inflation Targeting ◽  
Propensity Scores ◽  
Exchange Rate Regime ◽  
Flexible Exchange Rate ◽  
Marginal Effect ◽  
It Adoption ◽  
Exchange Rate Flexibility ◽  
The Exchange Rate

Abstract This paper investigates the effects of the adoption of inflation targeting (IT) on the choice of exchange rate regime in emerging markets (EMs), conditional on certain macroeconomic conditions. Using a large sample of EMs and after dampening the endogeneity of the adoption of IT using a selection on observables, we find that IT countries on average have a relatively more flexible exchange rate regime than other EMs. However, the flexibility of the exchange rate regime shows strong heterogeneity among IT countries. IT countries with low trade and financial openness and with a large share of external debt exhibit a lower exchange rate flexibility than others. Moreover, the marginal effect of IT adoption on the exchange rate flexibility increases with the duration of the IT regime in place, and with the propensity scores to adopt it.

scholarly journals Global Financial Cycles and the Exchange Rate Regime: A Perspective from Emerging Markets

2018 ◽  
Vol 108 ◽  
pp. 499-504 ◽  
Author(s):  
Maurice Obstfeld ◽  
Jonathan D. Ostry ◽  
Mahvash S. Qureshi
Keyword(s):  
Exchange Rate ◽  
Emerging Markets ◽  
Exchange Rate Regime ◽  
Emerging Market ◽  
Exchange Rate Regimes ◽  
Exchange Rate Flexibility ◽  
Macroeconomic Conditions ◽  
Financial Conditions ◽  
Advanced Economies ◽  
Financial Cycles

This paper examines the claim that exchange rate regimes are of little relevance in the transmission of global financial conditions to domestic financial and macroeconomic conditions. Our findings suggest that exchange rate regimes do matter, at least for emerging market economies. The transmission of global financial shocks to domestic variables is magnified under fixed exchange rate regimes relative to more flexible regimes. For advanced economies, however, the jury is still out, as the recent paucity of truly fixed regimes among these economies poses a challenge for estimating the effect of exchange rate flexibility.

scholarly journals Inflation Targeting and Exchange Rate Regimes in Emerging Markets

2015 ◽  
Vol 15 (228) ◽  
pp. 1 ◽  
Author(s):  
Christian Ebeke ◽  
Armand Fouejieu ◽  
◽  
Keyword(s):  
Exchange Rate ◽  
Emerging Markets ◽  
Inflation Targeting ◽  
Exchange Rate Regimes

scholarly journals Volatilité des chocs et degré de flexibilité du taux de change

2007 ◽  
Vol 54 (3) ◽  
pp. 271-301 ◽  
Author(s):  
Jean-Pierre Allegret ◽  
Mohamed Ayadi ◽  
Leila Haouaoui
Keyword(s):  
Exchange Rate ◽  
Emerging Markets ◽  
Capital Mobility ◽  
Financial Integration ◽  
Exchange Rate Regime ◽  
Exchange Rate Regimes ◽  
International Capital Mobility ◽  
International Financial Integration ◽  
The Exchange Rate ◽  
Almost All

During the 90s emerging markets have been hit by recurrent exchange rate crises. Almost all these countries shared a common characteristic: they adopted in previous years soft pegs, the so-called intermediate exchange rate regimes. International institutions and academic economists interpreted this intrinsic fragility of soft pegs as a consequence of the increasing international capital mobility. From this perspective, the exchange-rate regime is seen as constrained by the monetary policy trilemma, which imposes a stark trade-off among exchange stability, monetary independence, and capital market openness. Soft pegs seem incompatible with international financial integration. As a result, a new consensus appeared: the choice of domestic authorities is limited to corner solutions: hard pegs on the one side; independent floating on the other side. This paper proposes a contribution to the analysis of exchange rate regimes choice by emerging markets. The new consensus is questioned by considering that emerging countries are confronted not in the choice between extreme solutions, but rather with the choice of the degree of fixity- or the degree of flexibility- of the exchange rate.

scholarly journals Exchange Rate Regime, Inflation Targeting and Macroeconomic Performance

2016 ◽  
Vol 8 (8) ◽  
pp. 143
Author(s):  
Houda Jendoubi El Achnab
Keyword(s):  
Exchange Rate ◽  
Inflation Targeting ◽  
Exchange Rate Regime ◽  
Flexible Exchange Rate ◽  
Emerging Countries ◽  
Macroeconomic Performance ◽  
Panel Models ◽  
Fixed Exchange Rate ◽  
Targeting Strategy

<p>This study aims to examine whether emerging countries can use both an inflation targeting strategy and exchange rate regime targeting in order to improve their macroeconomic performance. Empirically, we are based on a sample of 28 emerging countries, over the period 1985-2000. Our findings yielded from mean comparisons tests reveal that in addition to the inflation targeting strategy, countries may adopt an exchange rate regime to improve their growth and decrease their inflation. Moreover, the use of interactive variables in panel models shows that the inflation targeting strategy is a complement to the flexible exchange-rate regime and a substitute for the fixed exchange rate regime.</p>

Exchange Rate Regimes and Economic Stability

2010 ◽  
pp. 29-43
Author(s):  
S. Smirnov
Keyword(s):  
Exchange Rate ◽  
Inflation Targeting ◽  
Exchange Rate Regime ◽  
Exchange Rate Policy ◽  
Real Sector ◽  
Economic Stability ◽  
Exogenous Shocks ◽  
Floating Exchange Rate ◽  
Rate Policy ◽  
Managed Floating

The Bank of Russia intends to introduce inflation targeting policy and exchange rate free floating regime in three years. Exogenous shocks absorption which stabilizes the real sector of economy is usually considered to be one of the advantages of free floating exchange rate policy. However, our research based on the analysis of 25 world largest economies exchange rates and industrial production during the crisis of 2008-2009 does not confirm this hypothesis. The article also analyzes additional risks associated with free floating exchange rate regime in Russia and presents some arguments in favor of managed floating exchange rate regime.

scholarly journals Euroisation in the Western Balkans: The Evidence for Macedonian Economy

2017 ◽  
Vol 8 (2) ◽  
pp. 307-315
Author(s):  
Tatjana Boshkov ◽  
Zoran Temelkov ◽  
Aleksandra Zezova
Keyword(s):  
Exchange Rate ◽  
Foreign Currency ◽  
Exchange Rate Regime ◽  
Extended Period ◽  
Emerging Countries ◽  
Western Balkans ◽  
Balkan Countries ◽  
High Level ◽  
Benefits And Costs ◽  
Prudential Policy

Abstract Euroisation is a problem with a long history and usually persistent phenomena. The high level of euroisation is common in emerging countries in Europe as in the countries with fixed exchange rate regime. In Western Balkan countries have been identified a strong presence of foreign currency. The fact is that transactions could take a place outside of the banking channels, which is not a case for FX-loan and FX-deposit ratios. It’s difficult to measure how much foreign money is in the economy. This is the reason to use data for currency substitution index. This index is high for Macedonia indicating high level of real euroisation. After the crisis, the levels are reduced (lower remittances from abroad). Considering the exchange rate experience of Macedonia, it’s likely to remain significantly euroised country for an extended period. IMF considers appropriate strategy which provides support for the gradual de-euroisation in maintaining macro-prudential policy and development of the domestic market. Another important strategy is the maintenance of prudent policies that mitigate foreign currency risks. The paper shows the persistence of FX mainly in Macedonian economy and discusses about benefits and costs, in light of the recent economic crisis.

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