The Taxonomy of Exchange Rate Regimes: Official and Behavioural Classification Schemes

Abstract

This chapter deals with the official and behavioural classifications of exchange rate regimes. The official classification of the IMF is the most common practical classification. This classification scheme is based on what individual member countries tell the IMF about the exchange rate arrangements they have in place. In recent years, economists started to develop systems of behavioural classification of exchange rate arrangements based on the observed behaviour of exchange rates and related variables, such as international reserves. One motivation for these efforts is the desire to find out if the exchange rate regime is irrelevant for economic performance, an issue that will be discussed in Chapter 7 and also in Chapter 8. Distinction is, therefore, made between the announced (de jure) and the actually practised (de facto) arrangements. Several studies that have made this attempt will be discussed in this chapter.