Institutional development and the choice of exchange rate regime: A cross-country analysisJournal of the Japanese and International Economies, 2009, vol. 23, issue 1, 56-70 Abstract: This paper investigates the choice of exchange rate regime by analyzing both de jure and de facto regime choices for the period 1973-1996. It finds that economic fundamentals, financial and political institutional variables provide relevant guidance for de jure regime choices. However, shocks are found to be the determinants of a de facto regime choice. The analysis shows that only a highly financially liberalized economy can sustain a corner regime. A partial financial liberalization increases the probability of divergence from the de jure regime in the face of various shocks, but an increase in the level of financial reforms decreases the probability of divergence. Moreover, regime choices are influenced by the IMF and regional financial architecture. The political institutions play an important role in the choice of a regime; however, their role varies with the level of financial development. J. Japanese Int. Economies 23 (1) (2009) 56-70. Keywords: De; jure; and; de; facto; exchange; rate; regime; Divergence; Learning; Financial; development (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jjieco:v:23:y:2009:i:1:p:56-70 Access Statistics for this article Journal of the Japanese and International Economies is currently edited by Takeo Hoshi More articles in Journal of the Japanese and International Economies from Elsevier |
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