Determinants of exchange-rate regimes for currencies of developing countries: Some preliminary results

The breakdown of the Bretton Woods system gave the LDCs an opportunity to move away from exchange-rate regimes based on pegging to a single currency. Relatively few chose to do so, thus providing some evidence that, from their point of view, the recognized advantages of more flexible exchange-rate arrangements are more than outweighed by the recognized drawbacks. The aim of this article is to set up a suitable econometric model and use it for a preliminary assessment of the quantitative significance of various factors affecting the choice of exchange-rate regimes by the LDCs.