Macroeconomic Policies, Bureaucracy and Deregulation: The Choice of the Exchange Rate Regime

Part of the International Studies in Entrepreneurship book series (ISEN, volume 20)


This chapter examines the contemporaneous relationship between the exchange rate regime and structural economic reforms over a period of 30 years. Using panel data techniques, we look at both a broad (“world sample”) and an OECD country sample. We investigate empirically whether structural reforms are complements or substitutes for monetary commitment in the attempt to improve macroeconomic performance. Our results suggest that, on average, an exchange rate rule positively correlates with the overall structural reforms and trade liberalization in particular. We do not find a significant and robust impact of exchange rate commitment on labor and product market reform, on the other hand. The results are similar for both the wider, more heterogeneous world sample and the panel of OECD economies. They contradict the hypothesis that exchange rate commitments may have slowed down the pace of structural reform, but neither provide robust evidence that losing the possibility of an exchange rate adjustment promotes labor and product market reforms.


Exchange Rate Monetary Policy Euro Area Economic Freedom Structural Reform 
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I am grateful for valuable comments from Gulcin Ozkan, University of York, Christoph Müller, University of Hohenheim, John Hudson, University of Bath, Gerrit B. Koester, Deutsche Bundes-bank, and other participants in the conferences “Bürokratieabbau in Europa”, November 11th, 2007, in Magdeburg, Schloss Wendgräben, Germany, organized by the Konrad-Adenauer-Stiftung, in the Conference on “The Travails of the Eurozone”, Money, Macro & Finance Research Group and University Association for Contemporary European Studies, March 24th, 2006, in Edinburgh, and in the 2008 Annual Meeting of the European Public Choice Society (EPCS), Jena. This chapter is based on my talk “Bürokratieabbau in Europa – Ein Reformvergleich in den EU-Mitgliedstaaten” given at the first conference, on my speech about “Monetary Policy as a Driver of Structural Reforms” (Session: “Structural Reform and the Euro”, delivered on the second occasion) and “Macroeconomic Policies, Bureaucracy and Deregulation – The Choice of the Exchange Rate Regime” (Session: “Money II”, delivered on the third occasion). The usual caveats apply.


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Copyright information

© Springer Science+Business Media, LLC 2009

Authors and Affiliations

  1. 1.University of Duisburg-Essen, and IZABonnGermany

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