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| Author: | Hoffman, M. |
| Title: | Fixed versus flexible exchange rates: evidence from developing countries |
| Journal: | Economica
2007 : AUG, VOL. 74:295, p. 425-449 |
| Index terms: | developing countries exchange rates interest rates |
| Language: | eng |
| Abstract: | This article explores the hypothesis that in a small open economy flexible exchange rates act as a shock absorber and mitigate the effects of external shocks more effectively than fixed exchange rate regimes. The data is sample of 42 developing countries. The article assesses whether the responses of real GDP the trade balance and the real exchange rate to world output and world real interest rate shock differ across exchange rate regimes. The results show that there are significant differences in the variability of macroeconomic aggregates under fixed and flexible exchange rate regimes. |
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