DP4227 The Choice of Exchange Rate Regime in Developing Countries: A Multinational Panel Analysis

Author(s): Jürgen von Hagen , Jizhong Zhou

Publication Date: February 2004

Keyword(s): exchange rate regimes , developing countries , multinomial logit model , static and dynamic panel , simulation

JEL(s): C25 , F33 , F41

Programme Areas: International Macroeconomics

Link to this Page: www.cepr.org/pubs/dps/DP4227.asp

This Paper analyses the choices of exchange rate regimes in developing countries since 1980. Static and dynamic random-effects multinomial panel models are estimated using simulation-based techniques. Explanatory variables include OCA fundamentals, stabilization considerations, currency crises factors, and political and institutional features. The results reveal strong state dependence in regime choices.