Fear of floating
By: Calvo, Guillermo A.
Contributor(s): Reinhart, Carmen.
Material type:
ArticlePublisher: 2002Description: p.379-408.Subject(s): Economic recession | Exchange rates
In:
Quarterly Journal of EconomicsSummary: Many emerging market countries have suffered financial crises. One view blames soft pegs for these crises. Adherents of this 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." - Reproduced.
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Articles
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Indian Institute of Public Administration | Volume no: 117, Issue no: 2 | Available | AR52787 |
Many emerging market countries have suffered financial crises. One view blames soft pegs for these crises. Adherents of this 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." - Reproduced.
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