IMF Working Papers

Fixed or Floating Exchange Regimes: Does it Matter for Inflation?

By Peter J. Quirk

November 1, 1994

Preview Citation

Format: Chicago

Peter J. Quirk Fixed or Floating Exchange Regimes: Does it Matter for Inflation?, (USA: International Monetary Fund, 1994) accessed November 21, 2024
Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper reviews recent experience with the choice of floating or fixed (“anchor”) exchange regimes in industrial and developing countries. It concludes that desirable differences between the two sets of regimes have narrowed, owing to the useful operational role of exchange rate margins and unavoidable medium-term rate adjustments in the context of fixed regimes. A survey of recent empirical cross-country literature also suggests little unambiguous association of the choice of exchange regime with macroeconomic performance, inflation in particular. Stability of the exchange rate has generally been a by-product of other policy choices. Even announcement effects of the regime on inflation-fighting credibility depend on the country-specific assignments of policy instruments to more than one institution--central bank, government, or regional and multilateral institutions.

Subject: Conventional peg, Exchange rate adjustments, Exchange rate arrangements, Exchange rates, Foreign exchange, Inflation, Prices

Keywords: Anchor exchange rate mechanism, Conventional peg, Country, Country episode, Excess demand, Exchange rate, Exchange rate adjustments, Exchange rate arrangements, Exchange rate variability, Exchange rate volatility, Exchange rates, Exchange regime, Financial asset, Government, Inflation, Movement result, Nominal exchange rate, Regime classification, Regime performance, Regime switch, Western Hemisphere, WP

Publication Details

  • Pages:

    30

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 1994/134

  • Stock No:

    WPIEA1341994

  • ISBN:

    9781451855531

  • ISSN:

    1018-5941

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