*We would like to thank Benn Steil, two anonymous referees and Eduard Hochreiter for helpful comments and suggestions on an earlier version of this paper. We gratefully acknowledge the hospitality of the Oesterreichische Nationalbank (OeNB) where the first author was a visiting researcher while parts of this paper were written. For delivery of data, we are grateful to Stefan Pitlik and Andreas Freytag.
Exchange Rate Regimes and Reforms: A Panel Analysis for the World versus OECD Countries*
Version of Record online: 6 NOV 2006
Volume 9, Issue 3, pages 317–342, Winter 2006
How to Cite
Belke, A., Herz, B. and Vogel, L. (2006), Exchange Rate Regimes and Reforms: A Panel Analysis for the World versus OECD Countries. International Finance, 9: 317–342. doi: 10.1111/j.1468-2362.2006.00184.x
- Issue online: 8 DEC 2006
- Version of Record online: 6 NOV 2006
This paper examines the contemporaneous relationship between the exchange rate regime and structural economic reforms over a period of 30 years. Using panel data techniques, we look at both a broad ‘world sample’ and an OECD country sample. We investigate empirically whether structural reforms have complemented or substituted for monetary commitment in the attempt to improve macroeconomic performance. Our results suggest that, on average, an exchange rate rule positively correlates with the amount of overall structural reforms and of trade liberalization in particular. However, we do not find a significant and robust impact of exchange rate commitment on labour and product market reform. The results are similar for both the wider, more heterogeneous world sample and the panel of OECD economies. They contradict the hypothesis that exchange rate commitments may have slowed the pace of structural reform, but neither provides robust evidence that losing the possibility of an exchange rate adjustment promotes labour and product market reforms.