Why Do Countries Peg the Way They Peg? The Determinants of Anchor Currency Choice »
Journal Issue
Volume/Issue: 2008/132
Series: IMF Working Papers
Author(s): Nienke Oomes , and Christopher Meissner
Publisher: INTERNATIONAL MONETARY FUND
Publication Date: 01 May 2008
DOI: http://dx.doi.org/10.5089/9781451869910.001
ISBN: 9781451869910
Keywords: exchange rate regime, anchor, network externalities, optimal currency area, exchange rate, exchange rate regimes, trade partners,
What determines the currency to which countries peg or "anchor" their exchange rate? Data for over 100 countries between 1980 and 1998 reveal that trade network externalities are a key determinant. This implies tha...