A New Study of De Facto Regime Classification Moving to Multilateral Exchange Rate Arrangement_based on scheme

This approach adopts hierarchical K‐means Clustering method as a basic classing tool to assign 97 countries’ samples to different de facto exchange rate regime groups over the period of 1976 to 2008. Besides, we constructed a fisher discrimination functions based on the classification for the extensibility and inheritability of the regime classification, and deduced the classification for 2009. The classification cast new light that in past thirty years the effective exchange rate in all regimes has become more stable over time. The classification coding also proves that: 1) Nominal bilateral and effective exchange rates have increasing trend as well as inflation form pegging to floating; 2) Comparing to developing countries, the behavior of developed countries’ effective exchange rate is more stable; 3) With the development of globalization, more and more developing countries choose to peg their major trade partners’ currency, which was reflected in the behavior of effective exchange rate. The classification coding database of the study can support further quantity studies on exchange rate regime, specially form the multilateral perspective.

Hitotsubashi University Research Project of Policies for East Asia

2011-02

English(eng)

technical report

VoR

21

Fukino foundation

Fukino Project Discussion paper series

https://hdl.handle.net/10086/18888