The article explores whether switching from fixed exchange rates to inflation targeting can lead to better monetary policy and economic stability in developing countries. The researchers found that fixed exchange rates may not impact long-term growth but can increase short-term output volatility during real shocks. They suggest that a flexible exchange rate and inflation targeting could lead to a more stable macroeconomic environment. The study used different statistical methods to analyze the impact of exchange rate regimes on output volatility and found that a terms-of-trade shock can lead to higher output volatility under fixed exchange rates compared to flexible ones.