The choice of exchange rate regime : how valid is the binary model?

Recent research on exchange rate regimes has stressed the similarity amongst intermediate regimes (managed floats and "soft" pegs) rather than the traditional peg/float dichotomy. We investigate the choice of regime amongst hard pegs, soft pegs, managed floats and independent floats for a panel of developing countries over the period 1990 - 2000. A simple binary peg/float model is rejected by the data. Our results suggest a matched ordering of regimes and count ry characteristics. Countries on intermediate regimes differ less than do those at opposite poles. Our findings are robust to regime classification by "what countries do" rather than by "what they say".