Soft peg regimes : sensitivity to crises and performance
Author(s)
Advisor
Böke, Selin SayekDate
2011Publisher
Bilkent University
Language
English
Type
ThesisItem Usage Stats
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Abstract
In this thesis, soft peg regimes’ sensitivity to crises and performance are investigated
after a brief review of exchange rate regimes and their historical evolutions. The
currency crisis faced by emerging countries under adaptation of soft peg regimes in the
1990s and in the beginning of 2000s revealed the suspicions on soft peg regimes’
vulnerability to crisis. With the increased tendency of countries adaptation of floating
regimes after abandonment of soft pegs, some arguments emerged inquiring the
appearance of soft peg regimes in the literature. The Corner Hypothesis, which defends
the disappearance of soft peg regimes and its counter argument The Fear Of Floating,
which does not accept the disappearance and another argument The Basket, Band and
Crawl Arrangements, which provides alternative soft peg regimes are analyzed in this
thesis. However, soft peg regimes’ vulnerability to currency crisis should not be
investigated without the emerging countries’ common characteristics, which can be
counted as lack of sound financial and fiscal structure and strong institutional
framework. At the end of this study, importance of strong financial and fiscal structure
of countries to provide macroeconomic balances including exchange rate regime is
mentioned.
Keywords
Exchange Rate RegimeThe Corner Hypothesis
The Fear of Floating
The Basket
Band and Crawl Arrangements
Soft Peg Regimes
Currency Crises