Currency Boards: The Ultimate Fix?

Author/Editor:

Atish R. Ghosh

Publication Date:

January 1, 1998

Electronic Access:

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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:

The growing integration of world capital markets has made it fashionable to argue that only extreme exchange rate regimes are sustainable. Short of adopting a common currency, currency board arrangements represent the most extreme form of exchange rate peg. This paper compares the macroeconomic performance of countries with currency boards to those with other forms of pegged exchange rate regime. Currency boards are indeed associated with better inflation performance, even allowing for potential endogeneity of the choice of regime. Perhaps more surprisingly, this better inflation performance is accompanied by higher output growth.

Series:

Working Paper No. 1998/008

Subject:

Currency boards Exchange rate arrangements Exchange rates External position Foreign assets Foreign exchange Inflation Prices

Frequency:

Quarterly

English

Publication Date:

January 1, 1998

ISBN/ISSN:

9781451927955/1018-5941

Stock No:

WPIEA0081998

Pages:

23

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