Exchange rate regimes, devaluations and growth collapses

Bleaney, Michael; Saxena, Sweta; Yin, Lin

Abstract

The loss of output in major recessions tends to be permanent. Using IMF de facto exchange rate regime classifications over the period 1980 to 2012 for up to 193 countries, it is shown that growth collapses are more frequent under less flexible exchange rate regimes, and particularly hard pegs. Amongst intermediate regimes, those with recent devaluations are less likely to experience a growth collapse, which confirms the role of exchange rate adjustment in reducing the output effects of a negative shock. Our findings are robust to the marked shift in the pattern of growth collapses after the global financial crisis.

Citation

Bleaney, M., Saxena, S., & Yin, L. (2018). Exchange rate regimes, devaluations and growth collapses. Journal of Macroeconomics, 57, https://doi.org/10.1016/j.jmacro.2018.05.002

• Journal Article Type: Article
• Acceptance Date: May 9, 2018
• Online Publication Date: May 10, 2018
• Publication Date: Sep 30, 2018
• Deposit Date: May 15, 2018
• Publicly Available Date: May 11, 2019
• Journal: Journal of Macroeconomics
• Print ISSN: 0164-0704
• Electronic ISSN: 0164-0704
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 57
• DOI: https://doi.org/10.1016/j.jmacro.2018.05.002
• Keywords: exchange rate regimes, devaluations, growth collapses, global financial crisis
• Public URL: https://nottingham-repository.worktribe.com/output/950381
• Publisher URL: https://www.sciencedirect.com/science/article/pii/S0164070418300594?via%3Dihub
• Contract Date: May 15, 2018