The median developing country has had significantly higher inflation than the median advanced country since the early 1980s. A model is presented in which a developing country may reduce inflationary expectations by pegging its exchange rate to the currency of an advanced country (or a basket of...

For developing countries, it is shown that different exchange rate classification schemes paint a very inconsistent picture. Disagreements between alternative schemes are as great as with the official scheme. Only the official scheme shows a trend towards floating.

Official and four alternative regime classification schemes based on observed exchange rate behaviour are used to examine the relationship with inflation and growth in developing countries. For an identical sample of observations from 73 countries for 1984-2001, only the scheme based on parallel...