To Peg or Not to Peg: A Template for Assessing the Nobler

 
Author/Editor: Husain, Aasim M.
 
Publication Date: February 01, 2006
 
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
 
Summary: This paper proposes a template for assessing whether or not a country's economic and financial characteristics make it an appropriate candidate for a pegged exchange rate regime. The template employs quantifiable measures of attributes-trade orientation, financial integration, economic diversification, macroeconomic stabilization, credibility, and "fear-offloating" type effects-that have been identified in the literature as key potential determinants of regime choice. To illustrate, the template is applied to Kazakhstan and Pakistan. The results indicate a fairly strong case against a pegged regime in Pakistan. The implications for Kazakhstan are mixed, although changes in that economy in recent years strengthen the case against a peg.
 
Series: Working Paper No. 06/54
Subject(s): Exchange rate regimes | Pakistan | Kazakhstan | Currency pegs

Author's Keyword(s): Exchange rate regimes | regime choice | Kazakhstan | Pakistan
 
English
Publication Date: February 01, 2006
ISBN/ISSN: 1934-7073 Format: Paper
Stock No: WPIEA2006054 Pages: 29
Price:
US$15.00 (Academic Rate:
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