IDEAS home Printed from https://ideas.repec.org/a/pal/imfstp/v26y1979i4p654-698.html
   My bibliography  Save this article

Fixed and Flexible Exchange Rates: A Renewal of the Debate (Taux de change fixes et taux de change flexibles: reprise du débat) (Tipos de cambio fijos y tipos de cambio flexibles: Reanudación del debate)

Author

Listed:
  • Jacques R. Artus

    (International Monetary Fund)

  • John H. Young

    (International Monetary Fund)

Abstract

This paper reviews the extent to which a decade of analysis and experience has altered the thinking on the choice of an exchange rate system. The advantages of flexible rates are viewed to have been exaggerated. They do not permit governments to have permanently higher rates of economic activity at the expense of higher inflation, as some had thought. Further, the slow speed of adjustment to relative price changes limits the contribution of flexible rates to external adjustment in the short run and the degree of insulation from external influences that they provide. Finally, flexible rates tend to be fluctuating rates, and, although there is little empirical evidence so far showing that the fluctuations have had adverse effects on trade and capital flows, the exchange rate instability more than any other factor has led to a certain disillusionment with the floating exchange rate system. Notwithstanding the drawbacks of flexible rates, there will be a continuing need for exchange rate flexibility over the next few years, and some analysis is given of the problems of achieving greater stability under flexible rates or the requisite amount of flexibility under pegged rates. /// Les auteurs de la présente étude examinent dans quelle mesure l'analyse et l'expérience des dix dernières années ont modifié l'opinion relative au choix d'un système de taux de change. D'une façon générale, les avantages des taux de change flexibles ont été surestimés. L'adoption de taux flexibles ne permet pas aux gouvernements de soutenir en permanence des taux d'activité économique plus élevés qu'en régime de taux fixes, au prix d'une inflation plus forte, comme certains le croyaient. En outre, la lenteur de l'ajustement en fonction des variations des prix relatifs limite la contribution des taux flexibles au processus d'ajustement externe à court terme, de même que le degré d'isolation qu'ils offrent contre les influences extérieures. Enfin, les taux flexibles tendent à fluctuer et, bien qu'il ait été difficile jusqu' à présent de prouver, sur le plan empirique, l'influence négative de leurs fluctuations sur les flux commerciaux et les mouvements de capitaux, l'instabilité des taux de change, plus que tout autre facteur, a suscité un certain désenchantement à l'égard du flottement des monnaies. Malgré les inconvénients des taux de change flexibles, le besoin d'une certaine flexibilité des taux se fera encore sentir au cours des prochaines années. Les auteurs analysent les problèmes à résoudre pour obtenir une stabilité accrue en système de taux de change flexibles, ou le degré de flexibilité nécessaire en système de taux fixes mais ajustables. /// En este trabajo se examina la medida en que, tras una década de análisis y experiencia, ha variado la manera de pensar en cuanto a la elección de un sistema de tipos de cambio. Se considera que se han exagerado las ventajas de los tipos flexibles. Contrariamente a lo que algunos habían pensado, dichos tipos no permiten que los gobiernos mantengan un ritmo de actividad económica que aumente permanentemente a costa de una mayor inflación. Además, la lentitud con que se produce el ajuste a las variaciones de los precios relativos en los mercados de bienes limita la influencia de los tipos de cambio flexibles desde el punto de vista tanto de su contribución al ajuste externo a corto plazo como del grado en que permiten que los países se aislen de las influencias externas. Finalmente, los tipos flexibles tienden a fluctuar y, pese a que hasta ahora hay pocas pruebas empíricas en el sentido de que las fluctuaciones hayan tenido efectos perjudiciales en el comercio y los movimientos de capital, la inestabilidad de los tipos de cambio--más que cualquier otro factor--ha causado cierta desilusión respecto del sistema de tipos de cambio flotantes. Pese a las deficiencias de los tipos de cambio flexibles, durante los próximos ańos se seguirá necesitando la flexibilidad de los mismos y en este trabajo se analizan los problemas que se presentan al tratar de lograr una mayor estabilidad con tipos de cambio flexibles o la flexibilidad requerida con tipos de cambio vinculados.

Suggested Citation

  • Jacques R. Artus & John H. Young, 1979. "Fixed and Flexible Exchange Rates: A Renewal of the Debate (Taux de change fixes et taux de change flexibles: reprise du débat) (Tipos de cambio fijos y tipos de cambio flexibles: Reanudación del de," IMF Staff Papers, Palgrave Macmillan, vol. 26(4), pages 654-698, December.
  • Handle: RePEc:pal:imfstp:v:26:y:1979:i:4:p:654-698
    as

    Download full text from publisher

    File URL: http://www.jstor.org/stable/3866966?origin=pubexport
    File Function: main text
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Gagnon, Joseph E., 1989. "Adjustment costs and international trade dynamics," Journal of International Economics, Elsevier, vol. 26(3-4), pages 327-344, May.
    2. Lee, Hyun-Hoon & Huh, Hyeon-Seung & Harris, David, 2003. "The relative impact of the US and Japanese business cycles on the Australian economy," Japan and the World Economy, Elsevier, vol. 15(1), pages 111-129, January.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pal:imfstp:v:26:y:1979:i:4:p:654-698. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.palgrave-journals.com/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.