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Quasi-experimental analysis of the impact of exchange rate regime selection on crisis recovery: evidence from the Asian Financial Crisis

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  • Ross J. Hallren

Abstract

Research typically treats exchange rate regime selection as exogenous. Using the Asian Financial Crisis as a case study, we show that countries that peg in 1996 and countries that float in 1996 are, on average, different from each other on variables that affect the outcomes of interest. After accounting for endogenous exchange rate regime selection using propensity score matching, we find that a country's exchange rate regime choice in 1996 had no significant impact on the size of the shock to real income levels, but reduced subsequent income growth and weakly increased inflation.

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  • Ross J. Hallren, 2015. "Quasi-experimental analysis of the impact of exchange rate regime selection on crisis recovery: evidence from the Asian Financial Crisis," Applied Economics Letters, Taylor & Francis Journals, vol. 22(8), pages 613-618, May.
    • Handle: RePEc:taf:apeclt:v:22:y:2015:i:8:p:613-618
    DOI: 10.1080/13504851.2014.962218
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    Cited by:

    1. Ovidiu Stoica & Iulian Ihnatov, 2016. "Exchange Rate Regimes And External Financial Stability," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 61(209), pages 27-44, April - J.

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