Essays on exchange rate policy in developing countries

The breakdown of the Bretton Woods system of pegged exchange rates has since 1971 given developing countries a wider range of choice with regard to their exchange rate regimes than had previously existed. With the emergence of a variety of exchange rate regimes, increasing attention has been given to the rationale for choosing one type of regime over another and how the variations in the nominal or real exchange rate affect the economies of these countries. This Ph.D. thesis is a combination of essays on exchange rate policy in developing countries along the lines of adoption of exchange rate regime and the determination of the nominal or real exchange rate variations. It attempts to investigate the following: (i) the role of `learning' in exchange rate regim adoption; (ii) the economic implications of adopting a monetary union in the Southern-Africa Development community (iii) the role of politics in determining exchange rate devaluation; and (iv) the problem of currency convertibility. The study partly build theoretical models and partly empirically investigates these models by employing various econometric, statistical and mathematical techniques.