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Credibility of Policies, Exchange-rate Regime and Currency Crises
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TitleCredibility of Policies, Exchange-rate Regime and Currency Crises  
AuthorWang Daoping, Fan Xiaoyun and Chen Lei  
OrganizationNankai University;;; 
Key WordsExchange-rate Regime; Currency Crises; Capital Control; Expectation 
AbstractBased on a panel of annual data for the emerging markets and developing countries from 1970 through 2010, this paper examines the impact of different exchange rate regimes announcements and the credibility of government’s exchange rate policies on the probability of currency crises. The results shows that, for emerging markets and developing countries, the greater flexibility of the exchange rate regimes announced by the authorities and the greater tolerance of exchange rate volatility, the probability of the occurrence of currency crisis will be greater; in addition, if the government’s exchange rate policies lack credibility, it is easy to trigger speculative attack and increase the incidence of currency crisis. For emerging markets and developing countries, correct expectation guiding and confidence improving in the government’s policy to maintain a stable exchange rate will be helpful to eliminate the panic of exchange rate collapse, reduce speculative attack, and prevent the occurrence of currency crises. 
Serial NumberWP1079 
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