Exchange rate regimes and macroeconomic performance: a review of the literature

This paper provides an assessment of the theoretical and empirical literature on the relationship between exchange rate regimes and macroeconomic performance. The main conclusion is that the distinction between fixed and flexible exchange rate regimes appears to be important for developing economies, but not for developed economies. In particular, flexible exchange rate regimes appear to be more favorable for an emerging economy, both theoretically and empirically. However, the evidence is not entirely robust to the method used to classify exchange rate regimes. (Audio: Department of Economic Publications)