Exchange rate regime choice and economic performances: An empirical study using microeconometric methods

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This study evaluates the effects of exchange rate regimes on economic performances using microeconometric methods. Especially, I investigate whether deviations of actual exchange rate regimes from announced regimes affect the occurrence of currency crises using matching methods. I find that countries with consistent pegs (i.e., a policy in which countries actually adopt announced pegged regimes) have a significantly lower probability of currency crises than countries with other exchange rate policies. More interestingly, I find that countries with consistent pegs have a significantly lower probability of currency crises than those with a fear of announcing a peg policy (i.e., a policy in which countries actually adopt pegged regimes but do not claim to have pegged regimes). Therefore, I statistically confirm that deviations of actual exchange rate regimes from announced regimes significantly affect the occurrence of currency crises.