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From Fixers to Floaters: an Empirical Analysis of the Decline in Fixed Exchange Rate Regimes

Author

Listed:
  • Bratberg, E.
  • Legernes, L.E.
  • Vardal, E.

Abstract

The purpose of this article is to explain the decrease in the fixed exchange rate regimes we have experienced the last decades. Our econometric approach is duration analysis, and the explanatory variables used are taken from the literature on optimum currency areas. The sample consists of 51 countries and covers the period 1973-1995. The degree of openness proves to be the most influential variable. Increasing openness by 1% decreases the hazard for adopting a floating exchange rate by 1.29%, i.e. an elasticiy of -1.29. The size of a country and the inflationary differential against foreign countries are also significant. But the corresponding elasticities (0.19 and 0.25) are considerably lower than for openness.

Suggested Citation

  • Bratberg, E. & Legernes, L.E. & Vardal, E., 1999. "From Fixers to Floaters: an Empirical Analysis of the Decline in Fixed Exchange Rate Regimes," Norway; Department of Economics, University of Bergen 1599, Department of Economics, University of Bergen.
    • Handle: RePEc:fth:bereco:1599
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    More about this item

    Keywords

    EXCHANGE RATE ; INTERNATIONAL ECONOMY ; MONETARY POLICY;
    All these keywords.

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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