A theory of fear of floating

• 成果类型: Article
• 署名作者: Bianchi, Javier; Coulibaly, Louphou
• 署名单位: Federal Reserve System - USA; Federal Reserve Bank - Minneapolis; University of Wisconsin System; University of Wisconsin Madison; University of Cambridge
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2025.103869
• 发表日期: 2026
• 关键词: monetary-policy; financial crises; Emerging markets; balance sheets; open-economy; dollarization; welfare

摘要

Central banks with flexible exchange rate regimes are often reluctant to let their currency float, a phenomenon known as fear of floating. We develop a framework in which a floating exchange rate may exacerbate vulnerability to self-fulfilling financial crises rather than provide the intended insulation against external shocks. A commitment to a crawling peg-where the currency can fluctuate within a predetermined band-can help mitigate the risk of self-fulfilling crises. In contrast to the Mundell-Fleming paradigm, the optimal exchange rate policy entails allowing the exchange rate to float in response to real shocks while maintaining it fixed in response to non-fundamental shocks.