Why Do Countries Peg the Way They Peg? The Determinants of Anchor Currency Choice

@inproceedings{Meissner2004WhyDC,
  title={Why Do Countries Peg the Way They Peg? The Determinants of Anchor Currency Choice},
  author={Christopher M. Meissner and Nienke A. Oomes},
  year={2004}
}
Conditional on choosing a pegged exchange rate regime, what determines the currency to which countries peg or “anchor” their exchange rate? This paper aims to answer this question using a panel multinomial logit framework, covering more than 100 countries for the period 1980-1998. We find that trade network externalities are a key determinant of anchor currency choice, implying that there are multiple steady states for the distribution of anchor currencies in the international monetary system… CONTINUE READING

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