The choice of exchange rate regimes in developing countries: A multinomial panel analysis

This paper analyses the choices of exchange rate regimes in developing countries since 1980. Static and dynamic random-effects multinomial panel models are estimated using simulation-based techniques. Explanatory variables include OCA fundamentals, stabilization considerations, currency crises factors, and political and institutional features. The results reveal strong state dependence in regime choices. We also find evidence for non-monotonic relationship between regime determinants and the degree of regime flexibility.