Working Paper: CEPR ID: DP4227
Authors: Jürgen von Hagen; Jizhong Zhou
Abstract: This Paper analyses the choices of exchange rate regimes in developing countries since 1980. Static and dynamic random-effects multinomial panel models are estimated using simulation-based techniques. Explanatory variables include OCA fundamentals, stabilization considerations, currency crises factors, and political and institutional features. The results reveal strong state dependence in regime choices.
Keywords: developing countries; exchange rate regimes; multinomial logit model; simulation; static and dynamic panel
JEL Codes: C25; F33; F41
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| trade openness (F43) | choice of regime (D70) |
| high inflation rates (E31) | choice of regime (D70) |
| real exchange rate volatility (F31) | choice of regime (D70) |
| political freedom (P26) | choice of regime (D70) |
| political instability (O17) | choice of regime (D70) |