From Fixed to Float: A Competing Risks Analysis

This paper examines the determinants of exchange rate regime of a country. A competing risks model (CRM) is estimated. It is found that the way a country exits a fixed exchange rate regime is affected nonlinearly by the duration of the peg. In addition, countries with a lower growth rate of reserves, more incidences of banking crises, higher trade concentration and lower degree of capital-account liberalisation are more likely to have a crisis-driven exit.