Chapter 23. The Performance of Alternative Monetary Regimes This paper compares the performance of economies with different monetary regimes during the last quarter century. The conclusions include: (1) There is little evidence that inflation targeting affects performance in advanced economies but some evidence of benefits in emerging economies; (2) Europes monetary union has increased intra European trade and capital flows but divergence in national price levels may destabilize output in the future; (3) The monetary analysis of the European Central Bank has little effect on the ECBs policy decisions; and (4) Countries with hard currency pegs experience unusually severe recessions when capital flight occurs.