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Blogs review: The comparative performance of fixed and flexible ER regimes

Cohen-Setton, J., (2013), “Blogs review: The comparative performance of fixed and flexible ER regimes”, Bruegel, 29 Οκτωβρίου.

Andrew Rose recently published a provoking paper, which shows that the choice of the exchange rate regime has had little influence on economic outcomes in the Great Recession. While the empirical analysis of the paper excludes EMU countries, this result has challenged the consensus that life outside the euro would have been easier for periphery countries.  Paul Krugman even wrote a new paper with a full-fledged New Keynesian model to counter the argument and to show that the effect of a sudden-stop under a floating exchange rate ought to be expansionary.

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