01783cas a2200241 a 4500 AALejournalIMF006233 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451962000 1018-5941 BD-DhAAL BD-DhAAL Imam, Patrick. Exchange Rate Choices of Microstates / Patrick Imam. Washington, D.C. : International Monetary Fund, 2010. 1 online resource (48 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students In this paper we first explain why most microstates (countries with less than 2 million inhabitants) have gained independence only in the last 30 years. Despite the higher costs and risks microstates face, their ability to better accommodate local preferences combined with a more integrated world economy probably explains why the benefits of independence have risen. We explain why microstates at independence have chosen either dollarization, currency board arrangements, or fixed exchange rates rather than more flexible forms of exchange rate systems. We then, using the Geweke-Hajvassiliou-Keane multivariate normal simulator, model empirically the determinants of each of the different fixed exchange rate regimes in microstates and analyze the policy implications. Mode of access: Internet IMF Working Papers; Working Paper ; No. 2010/012 Full text available on IMF http://elibrary.imf.org/view/journals/001/2010/012/001.2010.issue-012-en.xml IMF e-Library