Grace Juhn Paolo Mauro Section IV (D) Presented by: Mahmoud Arab Long-Run Determinants of Exchange Rate Regimes: A Simple Sensitivity Analysis Grace Juhn Paolo Mauro Section IV (D) Presented by: Mahmoud Arab

Estimation Strategy Cross-country regression for a variety of years End of 2000 End of 1990 Estimation Techniques: Regime classification ( Section IV, A) Sets right hand side variables ( Section IV, C)

Estimation Strategy Why not panel data ? Method: Problematic since many potential variables do not change over time for many countries E.g. political instability Method: Summary statistics of the potential determinants of exchange rate regime choice by regime group. Run regression of Exchange rate regimes on all studied variables.

Estimation Strategy Initial results: No variables turn out individually significant. Instead, the authors select three variables for baseline regression on the basis of following criteria: Variables have been used by many previous studies Have solid theoretical underpinning Available for large number of countries

Estimation Strategy These variables are: Trade openness. The log of gross national product at purchasing power parity. The share of trade with countries’ largest trading partner. After that run regression by adding 4 variables to the baseline until all the data in the study are added.

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