2006), “Choosing (and Reneging on) Exchange Rate Regimes

We use data on announced and actual exchange rate arrange-ments to ask which countries follow de facto regimes different from their de iure ones, that is, do not do what they say. Our results suggest that countries with poor institutional quality have difficulty in maintaining pegging and abandon it often. In con-trast, many countries with relatively good institutions display fear of floating, i.e., they manage more than announced, perhaps to signal their differences from those countries incapable of main-taining promises of monetary stability.