The Exchange Rate Regimes and Borrowing Ability: Estimation of Linkage

Abstract

This study empirically investigates the linkage between borrowing ability and exchange rate regimes in emerging market economies using the panel data from 1970-2016. The paper focuses on evaluating the borrowing ability as the measure of quantity and price. The key findings indicate that switching from floating to soft peg regime does not contribute to the level of borrowing ability while the switching from floating to hard peg can positively increase the level of borrowing.