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Exchange Rate Regimes in the Modern Era$
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Michael W. Klein and Jay C. Shambaugh

Print publication date: 2009

Print ISBN-13: 9780262013659

Published to MIT Press Scholarship Online: August 2013

DOI: 10.7551/mitpress/9780262013659.001.0001

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Exchange Rate Regimes in an Interdependent World

Exchange Rate Regimes in an Interdependent World

(p.204) (p.205) 12 Exchange Rate Regimes in an Interdependent World
Exchange Rate Regimes in the Modern Era

Michael W. Klein

Jay C. Shambaugh

The MIT Press

This chapter summarizes in conclusion for the whole book on the subject of exchange rate regimes and how it has impacted economies in the last thirty-five years. Exchange rate regimes do have an effect on how exchange rates behave, and it is shown that the choices countries make with regard to exchange rate regimes do matter and affect outcomes. Economic theory and monetary autonomy are a limited means of setting interest rates. Pegging countries, therefore, should instead follow the interest rate policy of their base country. Exchange rate regimes are indeed important and require consideration as variables in economic growth, however they are not expected to greatly determine the long-run potential growth of an economy.

Keywords:   exchange rate regimes, exchange rates, economic theory, monetary autonomy, pegging, interest rate policy, economic growth

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