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The Performance of Exchange Rate Regimes in Developing Countries - Does the Classifications Scheme Matter?

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  • Michael Bleaney,
  • Manuela Francisco

Abstract

Official and four alternative regime classification schemes based on observed exchange rate behaviour are used to examine the relationship with inflation and growth in developing countries. For an identical sample of observations from 73 countries for 1984-2001, only the scheme based on parallel rates suggests a significant effect (negative) of floating on growth. Floats that claim to be pegs, or have high exchange rate volatility, are the ones with lower growth. Hard pegs offer inflation benefits. Floating is not consistently associated with higher inflation than soft pegs, and any apparent association is a possible by-product of the design of the classification algorithms.

Suggested Citation

  • Michael Bleaney, & Manuela Francisco, 2007. "The Performance of Exchange Rate Regimes in Developing Countries - Does the Classifications Scheme Matter?," Discussion Papers 07/04, University of Nottingham, CREDIT.
    • Handle: RePEc:not:notcre:07/04
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    References listed on IDEAS

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    7. repec:rus:hseeco:181565 is not listed on IDEAS
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    Cited by:

    1. Michael Bleaney & Manuela Francisco, 2007. "Classifying exchange rate regimes: a statistical analysis of alternative methods," Economics Bulletin, AccessEcon, vol. 6(3), pages 1-16.
    2. nnamdi, Kelechi & ifionu, Ebele, 2013. "Exchange rate volatility and exchange rate uncertainty in Nigeria: a financial econometric analysis (1970- 2012)," MPRA Paper 48316, University Library of Munich, Germany, revised 2013.
    3. Hiroyuki Yamada & Gerwin Bell, 2012. "Why Did Southeastern European Countries Experience Low Inflation Rates in the Beginning of This Century?," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 9(2), pages 229-246, August.
    4. International Monetary Fund, 2010. "Albania: Selected Issues," IMF Staff Country Reports 2010/206, International Monetary Fund.

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