On the Conversion of Exchange Rate Regimes——From Fixed to Floating Exchange Rates

Author: Chu Youyang
Publisher:
Publish Date: 2006-01-01
Features: After the collapse of the Bretton Woods system, the instability of the international financial system has been characterized by exchange rate regime adjustments accompanied by currency crises. While a free international monetary system has increased countries' autonomy in choosing exchange rate regimes, it has also created uncertainty in the choice of exchange rate regimes. Since 2002, the exchange rate regime of the Chinese yuan has become a focal point of international and domestic attention, but research has primarily focused on the costs and benefits of exchange rate fluctuations and the comparison of the advantages and disadvantages of exchange rate regimes. This paper argues that exchange rate regimes can exist in multiple equilibria and emphasizes an empirical approach. It employs the LOGISTIC model and the LOGIT model to study the exchange rate regime of the Chinese yuan, addressing whether a shift in the regime is necessary and how it should be adjusted.