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Indiana University Bloomington

BEPP

The Kelley Advantage

The department is home to the authors of Managerial Economics and Business Strategy and Games and Information: An Introduction to Game Theory, two of the nation’s leading textbooks in the field.

Research and Publications

Journal Articles

Fear of Floating and Pegging. A Simultaneous Choice Model of De-jure and De-facto Exchange Rate Regimes in Developing Countries

2009, Open Economies Review

Jürgen von Hagen, Jizhong Zhou

Abstract

We present an analysis of the determinants of de jure and de facto exchange rate regimes based on a panel probit model with simultaneous equations. The model is estimated using simulation-based maximum likelihood methods. The empirical results suggest a triangular structure of the model such that the choice of de facto regimes depends on the choice of de jure regimes but not vice versa. This gives rise to a novel interpretation of regime discrepancies.

Citation

von Hagen, Jürgen and Jizhong Zhou (2009), “Fear of Floating and Pegging. A Simultaneous Choice Model of De-jure and De-facto Exchange Rate Regimes in Developing Countries,” Open Economies Review, Vol. 20, No. 3, pp. 293-315. 

Keywords

de facto exchange rate regimes, developing countries and simultaneous equations