The Exchange Rate Regime And Economic Performance

No single currency regime is right for all countries or at all time. There is no consensus on the subject of the choice of exchange rate regime. With high frequency of worldwide financial crisis, the focal point about the exchange rate arrangement turns to the precautious ability of each kind of exchange rate regime. The discussion of academia concentrates on which kind of exchange rate regime can better deal with international capital mobility and instability of world capital market. While in this paper, in order to observe if some exchange arrangement performs better on economy than others, the key of exchange rate arrangement is the comparative study of different system on economic performance. Especially for developing countries, their particular economic characters need this comparative study. The article reviews the developing of exchange rate regime since 1990s, the new consensus of academia and the new theories of exchange rate regime. In the same time, it explains emphatically the suitability of present popular theories to developing countries. Then it carries on comparative analysis of the inflation, economic growth and precautions against crisis under different exchange rate regime. Finally the paper puts forward the difficulties when developing countries choose exchange rate regime and makes initial analysis about the exchange rate regime reform in China.