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Currency Boards in Retrospect and Prospect$
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Holger C. Wolf, Atish R. Ghosh, Helge Berger, and Anne-Marie Gulde

Print publication date: 2008

Print ISBN-13: 9780262232654

Published to MIT Press Scholarship Online: August 2013

DOI: 10.7551/mitpress/9780262232654.001.0001

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Currency Boards in Retrospect and Prospect

Wolf Holger C.

Ghosh Atish R.

Berger Helge

Gulde Anne-Marie

The MIT Press

This chapter reviews evidence on the benefits and costs of currency boards. It first considers the behavior of inflation, money growth, and interest rates under various exchange rate regimes. It then turns to the “real” side of the economy—exports, investment, and output growth. Next it examines whether countries with currency boards are more susceptible to financial crises. Currency boards are associated with lower inflation compared to other fixed exchange rate systems and floating rates. However, countries operating under currency board arrangements (CBAs) have experienced more volatile output growth, presumably because of the loss of the nominal exchange rate as an adjustment tool.

Keywords:   currency boards, inflation, money growth, interest rates, exchange rate regimes, financial crises

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