Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/104226 
Year of Publication: 
2007
Series/Report no.: 
Munich Discussion Paper No. 2007-38
Publisher: 
Ludwig-Maximilians-Universität München, Volkswirtschaftliche Fakultät, München
Abstract: 
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 contribute to the literature by identifying a number of robust stylized facts by means of an in-depth analysis of a large cross-country dataset. A key insight is that countries that operate under intermediate de facto regimes tend to announce fixed or flexible exchange rate regimes. The exact nature of deviations is related to country characteristics such as trade structure, financial development, and financial openness. Furthermore, regime discrepancies have followed secular trends, which are most likely related to financial globalization and changes in monetary policy design.
Subjects: 
Exchange rate regimes
de facto versus de jure
exchange rate policy
JEL: 
F31
F33
F41
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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