Exchange rate regime choice and currency crises


Asici A. A.

ECONOMIC SYSTEMS, vol.35, no.3, pp.419-436, 2011 (Journal Indexed in SSCI) identifier identifier

  • Publication Type: Article / Article
  • Volume: 35 Issue: 3
  • Publication Date: 2011
  • Doi Number: 10.1016/j.ecosys.2010.09.008
  • Title of Journal : ECONOMIC SYSTEMS
  • Page Numbers: pp.419-436

Abstract

Exchange rate regime choice is not exogenous, but it depends on the structural, political and financial features of countries. However, it is often the case that the regime actually pursued and the one that is imposed by country features do not match one to one. The existing empirical crisis models do not take fully into account the regime in which the crisis unfolded. The aim of this paper is to incorporate the appropriateness of the regime choice into the standard currency crisis model. The results show that the odds of crisis increase significantly in countries which have chosen regimes inconsistently. (c) 2011 Elsevier B.V. All rights reserved.