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

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.
Publication date: February 2006
ISBN: 9781451863147
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Money and Monetary Policy , International - Economics , regime choice , exchange rate , exchange rate regime , terms of trade , International Monetary Arrangements and Institutions , Macroeconomic Aspects Of International Trade And Finance

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