The empirical distinction between de facto and de jure exchange rate regimes raises a number of interesting questions. Which factors may induce a de facto peg? Why do countries enforce a peg but do not announce it? Why do countries \break their promises"? We show that a stable socio-political and an e±cient political decision-making process are a necessary prerequisite for choosing a peg and sticking to it, challenging the view that sees the exchange rate as a commitment device. Policymakers seem rather concerned with regime sustainability in the face of adverse economic and socio political fundamentals.

Tirelli, P., Colombo, E., Carmignani, F. (2004). Consistency versus credibility: how do countries choose their exchange rate regime? [Working paper del dipartimento].

Consistency versus credibility: how do countries choose their exchange rate regime?

TIRELLI, PATRIZIO;COLOMBO, EMILIO;
2004

Abstract

The empirical distinction between de facto and de jure exchange rate regimes raises a number of interesting questions. Which factors may induce a de facto peg? Why do countries enforce a peg but do not announce it? Why do countries \break their promises"? We show that a stable socio-political and an e±cient political decision-making process are a necessary prerequisite for choosing a peg and sticking to it, challenging the view that sees the exchange rate as a commitment device. Policymakers seem rather concerned with regime sustainability in the face of adverse economic and socio political fundamentals.
Working paper del dipartimento
Scientifica
Consistency; versus; credibility; countries choose; exchange; regime
English
Tirelli, P., Colombo, E., Carmignani, F. (2004). Consistency versus credibility: how do countries choose their exchange rate regime? [Working paper del dipartimento].
Tirelli, P; Colombo, E; Carmignani, F
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/10281/23040
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