- Atish Ghosh, Jonathan Ostry, and Charalambos Tsangarides
- Published Date:
- March 2011
© 2010 International Monetary Fund
Production: IMF Multimedia Services Division
Figures and Typesetting: Julio Prego
Ghosh, Atish R.
Exchange rate regimes and the stability of the international monetary system / Atish R. Ghosh, Jonathan D. Ostry, and Charalambos Tsangarides – Washington, D.C.: International Monetary Fund, 2010.
p. ; cm.—(Occasional paper (International Monetary Fund ; no. 270)
Includes bibliographical references.
1. Currency question. 2. Foreign exchange. I. Ostry, Jonathan D., 1962-II. Tsangarides, Charalambos G. III. International Monetary Fund. IV. Title. V. Series: Occasional paper (International Monetary Fund) ; no. 270.
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- 1 Overview
- 2 Introduction
- 3 Countries’ Choice of Exchange Rate Regime
- 3.1. Frequency Distribution of Exchange Rate Regimes, 1980–2008
- 3.2. Emerging Market Countries: De Jure and De Facto Floats
- 3.3. Real Exchange Rate Volatility at Alternative Horizons
- 3.4. Inflation
- 4.1. Emerging Market Countries: Foreign Reserves
- 4.2. Emerging Market Counties: Reserves versus Projected U.S. Dollar Value of GDP Growth
- 4.3. IMF Quota and New Arrangements to Borrow Resources
- 4.4. Current Account Surpluses and Deficits in G-20 Countries
- 4.5. Currency Composition of Reserves
- A1. Index of Similarity between Exchange Rate Regime Classifications
- 3.1. Distribution of Exchange Rate Regimes
- 3.2. Monetary Policy under Alternative Exchange Rate Regimes
- 3.3. Overall Government Balance, 1990–2007
- 3.4. Fiscal Policy under Alternative Exchange Rate Regimes
- 3.5. Inflation, 1980–2007
- 3.6. Inflation under Alternative Exchange Rate Regimes
- 3.7. Output Growth, 1980–2007
- 3.8. Channels of Indirect Association between Regime and Output Growth
- 3.9. Output Growth under Alternative Exchange Rate Regimes
- 3.10. Likelihood of Currency or Financial Crisis by Exchange Rate Regime
- 3.11. Current Account Balances
- 3.12. Current Account Reversals
- 3.13. Nonlinear Current Account Persistence Regression by Regime
- 3.14. Impact of Pegged Exchange Rates on Goods and Services Trade
- 3.15. Consumption-Smoothing Capital Flows under Alternative Exchange Rate Regimes
- 3.16. Structure of Net Capital Flows
- A1. Classification of Exchange Rate Regimes
The member countries of the International Monetary Fund (IMF) undertake to collaborate with each other and the IMF to assure orderly exchange arrangements and promote a stable system of exchange rates, recognizing that the essential purpose of the international monetary system is to facilitate the exchange of goods, services, and capital among countries, and to sustain sound economic growth. This Occasional Paper, requested by Executive Directors during their discussion of the Independent Evaluation Office (IEO) report on IMF exchange rate policy advice (IEO, 2007), reviews the stability of the overall system of exchange rates by examining macroeconomic performance (inflation, growth, crises) under alternative exchange rate regimes; implications of exchange rate regime choice for interaction with the rest of the system (external adjustment, trade integration, capital flows); and potential sources of stress to the international monetary system.
The paper was prepared under the direction of Jonathan D. Ostry, Deputy Director, Research Department, by a staff team led by Atish R. Ghosh, Chief, Systemic Issues Division, and comprising Marcos Chamon, Chris Crowe, Julian di Giovanni, Jun Kim, Marco Terrones, and Charalambos Tsangarides. The authors are grateful to Mary Yang and Maria Victoria Fazio for research assistance, and to Sheila Tomilloso for administrative assistance. David Einhorn of the External Relations Department, and Mahvash S. Qureshi of the Research Department, coordinated the production and publication of the paper.
An earlier draft of the paper was presented to the IMF’s Executive Board at an informal seminar, and the current version has benefited from the comments made by Executive Directors on that occasion. The opinions expressed in the paper are those of the authors, however, and do not necessarily reflect the views of the national authorities, the International Monetary Fund, or IMF Executive Directors.