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Exchange Rate Regimes and Growth Collapses

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  • Michael Bleaney
  • Sweta Saxena
  • Lin Yin

Abstract

The loss of output in major recessions tends to be permanent. Using IMF de facto exchange rate regime classifications over the period 1980 to 2012 for up to 193 countries, it is shown that growth collapses are more frequent under less flexible exchange rate regimes, and particularly hard pegs. Our findings are robust to the marked shift in the pattern of growth collapses after the global financial crisis.

Suggested Citation

  • Michael Bleaney & Sweta Saxena & Lin Yin, 2016. "Exchange Rate Regimes and Growth Collapses," Discussion Papers 2016/02, University of Nottingham, Centre for Finance, Credit and Macroeconomics (CFCM).
    • Handle: RePEc:not:notcfc:16/02
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    File URL: https://www.nottingham.ac.uk/cfcm/documents/papers/cfcm-2016-02.pdf
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    References listed on IDEAS

    as
    1. Valerie Cerra & Sweta Chaman Saxena, 2008. "Growth Dynamics: The Myth of Economic Recovery," American Economic Review, American Economic Association, vol. 98(1), pages 439-457, March.
    2. Edwards, Sebastian & Levy Yeyati, Eduardo, 2005. "Flexible exchange rates as shock absorbers," European Economic Review, Elsevier, vol. 49(8), pages 2079-2105, November.
    3. Michael Bleaney & Mo Tian, 2017. "Measuring exchange rate flexibility by regression methods," Oxford Economic Papers, Oxford University Press, vol. 69(1), pages 301-319.
    4. Atish R Ghosh & Jonathan D Ostry & Mahvash S Qureshi, 2015. "Exchange Rate Management and Crisis Susceptibility: A Reassessment," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 63(1), pages 238-276, May.
    5. Michael Bleaney & Mo Tian, 2014. "Classifying Exchange Rate Regimes by Regression Methods," Discussion Papers 14/02, University of Nottingham, School of Economics.
    6. Broda, Christian, 2004. "Terms of trade and exchange rate regimes in developing countries," Journal of International Economics, Elsevier, vol. 63(1), pages 31-58, May.
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    Cited by:

    1. Atsuyoshi Morozumi & Michael Bleaney & Zakari Mumuni, 2020. "Inflation targeting in low‐income countries: Does IT work?," Review of Development Economics, Wiley Blackwell, vol. 24(4), pages 1529-1550, November.

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    Keywords

    exchange rate regimes; growth collapses; global financial crisis;
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