Choosing the wrong exchange rate regime could harm emerging economies
The choice of exchange rate regime in emerging-market and transition economies is complex and depends on various factors like trade, inflation, and government credibility. Fixed exchange rates can boost international trade but may cause more economic ups and downs. Different countries have different needs, so there's no one-size-fits-all solution. Studies show that many factors influence the exchange rate regime choice, but it's hard to predict the exact outcomes.