FRIEDMAN REDUX: EXTERNAL ADJUSTMENT AND EXCHANGE RATE FLEXIBILITY

• 成果类型: Article
• 署名作者: Ghosh, Atish R.; Qureshi, Mahvash S.; Tsangarides, Charalambos G.
• 署名单位: International Monetary Fund
• 刊物名称: ECONOMIC JOURNAL
• ISSN/ISSBN: 0013-0133
• DOI: 10.1111/ecoj.12579
• 发表日期: 2019
• 页码: 408-438
• 关键词: rate regime

摘要

Milton Friedman argued that flexible exchange rates facilitate external adjustment. Recent studies find surprisingly little robust evidence that they do. We argue that this is because they use composite ('multilateral') exchange rate regime classifications, which often mask heterogeneous bilateral relationships between countries. Constructing a novel bilateral exchange rate regimes data set for 181 countries over 1980-2011, we find a statistically strong relationship between exchange rate flexibility and the speed of external adjustment. Our results are supported by several 'natural experiments' of exogenous changes in bilateral exchange rate regimes, and by Monte Carlo simulations, which show that tests based on standard multilateral regime classifications tend to have low statistical power.