The recent global financial crisis has sparked a renewal of debate on the choice of exchange rate regimes. Creating a tripartite regime classification, the present study examines their determinants for 137 nations spanning the period 1999–2011. I find that trade openness, economic development,...

This paper studies the choice of the exchange rate regime in emerging and developing countries. The literature on exchange rate regimes is often based either on theoretical models or on empirical analysis. Our paper presents a different perspective by developing a theoretical model which is...

This paper studies the effects of foreign exchange (FX) interventions in a two-region New Keynesian model where governments issue both short-term and long-term bonds. Imperfect substitutability between bonds gives rise to portfolio balance effects that make FX interventions effective....

This paper analyses the interconnectedness between developing countries' domestic wage levels and their exchange rate choices. The theoretical model illustrates that differences in domestic wage levels are related to countries' exchange rate regimes. In particular, the level of domestic wages...

A traditional argument in favor of flexible exchange rates is that they insulate output better from real shocks, because the exchange rate can adjust and stabilize demand for domestic goods through expenditure switching. This argument is weakened in a model with high foreign currency debt and...

The purpose of this paper is to emphasize the importance of Europe's structural problems and governance as the cause of the current euro area crisis. The euro may have led to bubbles, but member economies were not free of trouble before the euro. Many members were losing competitiveness and in...

We study the apparent disconnect between what countries announce to be their exchange rate regime and what they de facto implement. Even though discrepancies between announcements and de facto polices are frequent, there is a lack of understanding of actual patterns and underlying reasons. We...