Abstract
A new and easily implemented regression method is proposed for distinguishing floating from pegged regimes, whilst simultaneously identifying anchors of pegged currencies. The method can distinguish pegs with occasional devaluations from floats, and can be used to generate annual regime classifications. The method largely confirms the accuracy of the IMF’s de facto classification, but also shows that a significant minority of managed floats is close to being US dollar pegs. Even flexible managed floats have a strong tendency to track the US dollar.
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School Discussion Paper 2014-02, Michael Bleaney and Mo Tian propose a new and easily implemented regression method for distinguishing floating from pegged regimes, whilst simultaneously identifying anchors of pegged currencies.
Authors
Michael Bleaney and Mo Tian
NOTE: This discussion paper is an earlier version of M.F. Bleaney and M. Tian, Measuring Exchange Rate Flexibility by Regression Methods, Oxford Economic Papers, 2016, forthcoming. Citations should refer to the OEP version.
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Posted on Tuesday 1st April 2014