A comparison of exchange rate regime choice in emerging markets with advanced and low income nations for 1999-2011

•Creates classification of exchange rate regimes for 137 nations•Provides a comparative perspective across three different groups of nations•Employs different econometric techniques•Performs robustness checks with de facto measures of exchange rate flexibility•Regime choice is consistently influenced by conventional economic determinants.

The recent global financial crisis has sparked a renewal of debate on the choice of exchange rate regimes. Creating a tripartite regime classification, the present study examines their determinants for 137 nations spanning the period 1999-2011. I find that trade openness, economic development, foreign-currency liabilities, and foreign exchange reserve holdings increase the likelihood of choosing a fixed-type regime in emerging markets while economic size, export concentration ratios and financial development lower such a chance. Capital controls, inflation differential with an anchor nation and land size significantly influence regime-choice in advanced and low income countries, but are largely insignificant in emerging markets.