Duration of fixed exchange rate regimes: the role of central bank independence

Using a comprehensive dataset, this paper estimates a hazard model to examine whether central bank independence matters for the sustainability of fixed exchange rate regimes. The findings suggest that fixed exchange rate regimes are more likely to have a longer duration under more independent central banks; a result that holds true whether an exit from such a regime is orderly or disorderly. Thus, a more independent central bank is more likely to facilitate a more durable fixed exchange rate regime.