1. Surprising Similarities: Recent Monetary Regimes of Small Economies
Andrew K. Rose
Berkeley-Haas, CEPR and NBER

2. Rose: Monetary Regime Similarities
Focus
Q: Does monetary regime matter?
My interests
Recent: GFC and aftermath ( )
Small Countries: Not China, EMU, Japan, UK, USA
Empirical: Panel data, 170 countries
Compare two extreme monetary regimes
Floating with Inflation Target (>20% Global GDP)
Hard Fix (<10% Global GDP)
Rose: Monetary Regime Similarities

3. Rose: Monetary Regime Similarities
Monetary Stability
Few monetary regime switches recently
Unexpected because:
Historical counter-cyclicality
Size of GFC and Great Recession
Why the Stability? What’s New?
Countries that Float with Inflation Targeting
(Hard Fixes always around)
Natural to compare (two) stable regimes
Rose: Monetary Regime Similarities

4. Comparing Hard Fixers with Inflation Targeters
Broadly Similar Outcomes
Business Cycles, Capital Flows, Inflation, Trade, Current Account, Fiscal, Money, Reserves, Capital Controls, Exchange Rates, Asset Prices, …
Methodologies: graphs, regressions, matching, …
Implausible or Boring?
Surprising: two very different monetary regimes
Banal: literature since Baxter-Stockman
Regimes matter for little (except exchange rate)
Rose: Monetary Regime Similarities

5. Rose: Monetary Regime Similarities

6. Rose: Monetary Regime Similarities
Conclusion
Regime differences persist since unimportant
Growth, inflation, fiscal policy, current account, reserve growth … do not vary much by regime
Consistent with literature if counter-intuitive
Small countries now have stable alternative to hard fix; float with inflation target
Both regimes survived GFC and aftermath
This monetary stability new (compare: 1930s/1970s)
Cross-regime similarities, so can’t easily differentiate
Rose: Monetary Regime Similarities