Exchange rate regimes and unemployment

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Using data on 78 countries over 1980 to 2008 and a host of controls, this paper finds that switching from a floating regime to a pegged or an intermediate regime is likely to substantially reduce unemployment. Using a three-way regime classification, the estimated effect of switching to a pegged (to an intermediate) regime is around two percentage points (around one percentage point) after 2 years. These results are robust to variations in both specification and three-way classification. When using a four-way classification, we find evidence that switching from a float to a hard peg is most likely to reduce unemployment.
Original languageEnglish
Pages (from-to)537-553
Number of pages12
JournalOpen Economies Review
Issue number3
Early online date12 Sept 2012
Publication statusPublished - Jul 2013

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