COMPLETE SCHOOL PROJECT TOPICS & MATERIALS :
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ABSTRACT

Most of the empirical literature on the relative merits of alternative exchange rate regimes uses the IMF de jure classification based on the regime that governments claim to have, abstracting from the fact that many countries that in theory follow flexibleregimes intervene in the exchange market to an extent that in practice makes themindistinguishable from fixed rate regimes, and vice versa. To address this problem, inthis paper we construct a de factoclassification of exchange rate regimes. Using clusteranalysis techniques, we group different regimes according to their behavior along threeclassification dimensions: the nominal exchange rate, changes in the nominal exchangerate, and international reserves. We compare our results with the IMF classification, anddiscuss the main discrepancies.