HOW RELIABLE ARE <i>DE FACTO</i> EXCHANGE RATE REGIME CLASSIFICATIONS?

ABSTRACT We analyze disagreements over de facto exchange‐rate‐regime classifications using three popular de facto regime data series. While there is a moderate degree of concurrence across classifications, disagreements are not uncommon, and they are not random. They are most prevalent in middle‐income countries (emerging markets) and low‐income (developing) countries as opposed to advanced economies. They are most prevalent for countries with well‐developed financial markets, low reserves and open capital accounts. This suggests caution when attempting to relate the exchange rate regime to financial development, the openness of the financial account, and reserve management and accumulation decisions. Copyright © 2012 John Wiley &amp; Sons, Ltd.