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Title:Fear of floating and fear of pegging: An empirical anaysis of de facto exchange rate regimes in developing countries PDF Logo
Authors:Zhou, Jizhong
von Hagen, Jürgen
Issue Date:2004
Series/Report no.:ZEI working paper B 31-2004
Abstract:This paper uses a panel probit model with simultaneous equations to explain the joint determination of de facto and de jure exchange rate regimes in developing countries since 1980. We also derive an ordered-choice panel probit model to explain the causes of discrepancies between the two regime choices. Both models are estimated using simulation-based maximum likelihood methodsl. The results of the simultaneous equations model suggest that the two regime choices are dependent of each other and exhibit considerable state dependence. The ordered probit model provides evidence that regime discrepancies reflect an error-correction mechanism, and the discrepancies are persistent over time.
Subjects:de facto exchange rate regimes
developing countries
simultaneous equations model
simulated maximum likelihood
JEL:F33
F41
C35
Document Type:Working Paper
Appears in Collections:ZEI Working Papers, Zentrum für Europäische Integrationsforschung, Universität Bonn

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