Choice of exchange rate regime in transition economies: An empirical analysis

The political economy of exchange rate regimes in transition economies

“…Finally, we explore in detail a counterintuitive effect first indentified by Markiewicz (2006) and confirmed by our estimations. We find that, contrary to conventional wisdom, countries whose trade is more concentrated with Germany or the EMU are less likely to peg their exchange rates to the euro.…”

“…Klyuev (2002), von Hagen and Zhou (2005a, b), and Markiewicz (2006), for example, incorporate some political-economic factors in their work. However, they focus on explaining exchange rate regime choice using economic shocks, financial development, and other economic variables.…”

“…We expect trade openness to increase the likelihood of a peg. We also include the stock of 4 One could group the exchange rate regimes otherwise, e.g., by distinguishing between soft pegs and hard pegs (currency boards) or by redefining floats to include managed exchange rate regimes with no preannounced boundaries as in Markiewicz (2006) but the general tendencies are similar. 5 As can be expected, there are differences between the announced policies and the actual policies.…”

The choice of exchange rate regimes in the MENA countries: a probit analysis

“…Moreover, drawing on a large dataset with many potential explanatory variables and a variety of exchange rate regime classifications, the authors tested old and new theories and confirmed that no robust empirical regularities emerge. Other studies followed including Méon and Rizzo (2002), Levy-Yeyati et al (2002), Papaioannou (2003), Bleaney and Francisco (2005), Piragic and Jameson (2005), Markiewicz (2006), Von Hagen and Zhou (2007), Carmignani et al (2008), Calderón and Schmidt-Hebbel (2008), Kato and Uktum (2008) and Hossain (2009). The results of these studies are also mixed, being highly sensitive to the country coverage, sample period, estimation method and exchange rate regime classification, confirming the predictions of Juhn and Mauro (2002).…”

Is East Asia as Prepared as Eurozone for Monetary Union?

“…As postulated by the currency crisis model of exchange rate regime, the collapse of a pegged exchange regime is associated with a steady erosion of international reserves (Markiewicz 2006). The attack on a currency depletes reserves and forces the authorities to abandon the parity.…”