Currency regimes crucial in preventing currency misalignments in developing countries.
The study looked at how different exchange rate systems affect currency misalignments in developing countries. By analyzing data from 1980 to 2012, the researchers found that the impact of exchange rate regimes on currency misalignments depends on how well these systems reflect dysfunctional monetary policies. This means that the way a country manages its currency can have a big effect on whether its value is in line with economic fundamentals.