Exchange Rate Choices
AbstractBy late 1998, 101 countries had declared that their currencies were allowed to float against other currencies, meaning that the currency was not formally pegged to some other currency or basket of currencies. This was up from 38 ten years earlier, suggesting a significant move toward greater flexibility of exchange rates. Yet during the 1990s half a dozen countries installed currency boards, a particular strong form of exchange rate fixity; ten European currencies were eliminated in favor of a common currency, the euro; other countries were actively considering installing currency boards, or even adopting the US dollar for domestic use. After a quarter century of floating among the major currencies, exchange rate policy is sstill a source of vexation, and the appropriate choise is by no means clear. Should a country allows its currency to float, subject perhaps to exchange market intervention from time to time? Or should it fix its currency to some other currency or currencies, and if so to which one(s)? Economists do not offer clear persuasive answers to these questions. Yet for most countries, all but the largest, with the most develoed domestic capital markets, the choise of excahnge rate policy is probably their single most important macro-economic policy decision, strongly influencing their freedom of action and effectiveness of other macro-economic policies, the evolution of their financial systems, and even the evolution of their economies. This paper will not answer these questions, but it will suggest that the responses that have been given by many economists over the past few decades are inadequate and possibly quite poor advice to decision-makers.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Harvard - Institute of Economic Research in its series Harvard Institute of Economic Research Working Papers with number 1877.
Date of creation: 1999
Date of revision:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Bacchetta, Philippe & van Wincoop, Eric, 1998.
"Does Exchange Rate Stability Increase Trade and Capital Flows?,"
CEPR Discussion Papers
1962, C.E.P.R. Discussion Papers.
- Philippe Bacchetta & Eric van Wincoop, 1998. "Does exchange rate stability increase trade and capital flows?," Research Paper 9818, Federal Reserve Bank of New York.
- Philippe Bacchetta & Eric van Wincoop, 1998. "Does Exchange Rate Stability Increase Trade and Capital Flows?," Working Papers 98.04, Swiss National Bank, Study Center Gerzensee.
- Philippe Bacchetta & Eric Van Wincoop, 1998. "Does Exchange Rate Stability Increase Trade and Capital Flows?," NBER Working Papers 6704, National Bureau of Economic Research, Inc.
- Ricardo Hausmann & Michael Gavin & Carmen Pagés-Serra & Ernesto H. Stein, 1999. "Financial Turmoil and the Choice of Exchange Rate Regime," IDB Publications 4128, Inter-American Development Bank.
- Ronald I. McKinnon, 1996. "The Rules of the Game: International Money and Exchange Rates," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262133180.
- Ricardo Hausmann & Michael Gavin & Carmen Pagés-Serra & Ernesto H. Stein, 1999. "Financial Turmoil and Choice of Exchange Rate Regime," Research Department Publications 4170, Inter-American Development Bank, Research Department.
- C. Fred Bergsten & C. Randall Henning, 1996. "Global Economic Leadership and the Group of Seven," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 45.
- Chow, Hwee Kwan & Kim, Yoonbai, 2006. "Does greater exchange rate flexibility affect interest rates in post-crisis Asia?," Journal of Asian Economics, Elsevier, vol. 17(3), pages 478-493, June.
- Basse, Tobias, 2006. "Floating exchange rates and inflation in Germany: Are external shocks really irrelevant?," Economics Letters, Elsevier, vol. 93(3), pages 393-397, December.
- Cordeiro, Jose Luis, 2008. "Monetary Systems in Developing Countries: An Unorthodox View," IDE Discussion Papers 154, Institute of Developing Economies, Japan External Trade Organization(JETRO).
- António Portugal Duarte, 2005.
"Purchasing power parity: an empirical study of three EMU countries,"
- António Portugal Duarte, 2005. "Purchasing power parity: an empirical study of three EMU countries," International Finance 0505010, EconWPA.
- Barry Eichengreen & Ricardo Hausmann, 1999.
"Exchange rates and financial fragility,"
Proceedings - Economic Policy Symposium - Jackson Hole,
Federal Reserve Bank of Kansas City, pages 329-368.
- Amalia Morales Zumaquero & Simón Sosvilla Rivero, 2005.
"Structural Breaks in Volatility: Evidence for the OECD Real Exchange Rates,"
Economic Working Papers at Centro de Estudios Andaluces
E2005/01, Centro de Estudios Andaluces.
- Amalia Morales-Zumaquero & Simon Sosvilla-Rivero, . "Structural Breaks in Volatility: Evidence from the OECD Real Exchange Rates," Working Papers 2004-22, FEDEA.
- Domac, Ilker & Martinez-Peria, Maria Soledad, 2000.
"Banking crises and exchange rate regimes - Is there a link?,"
Policy Research Working Paper Series
2489, The World Bank.
- Domac, Ilker & Martinez Peria, Maria Soledad, 2003. "Banking crises and exchange rate regimes: is there a link?," Journal of International Economics, Elsevier, vol. 61(1), pages 41-72, October.
- Morales-Zumaquero, Amalia & Sosvilla-Rivero, Simon, 2010. "Structural breaks in volatility: Evidence for the OECD and non-OECD real exchange rates," Journal of International Money and Finance, Elsevier, vol. 29(1), pages 139-168, February.
- Tony Cavoli & Ramkishen Rajan, 2003.
"Exchange Rate Arrangements for East Asia Post-Crisis: Examining the Case for Open Economy Inflation Targeting,"
Centre for International Economic Studies Working Papers
2003-10, University of Adelaide, Centre for International Economic Studies.
- Ramkishen S. Rajan & Tony Cavoli, 2010. "Exchange Rate Arrangements For East Asia Post-Crisis: Examining The Case For Open Economy Inflation Targeting," Working Papers id:2718, eSocialSciences.
- Richard N. Cooper & Jane Sneddon Little, 2001. "U.S. monetary policy in an integrating world: 1960 to 2000," New England Economic Review, Federal Reserve Bank of Boston, pages 33-56.
- Francisco Ledesma-Rodriguez & Manuel Navarro-Ibanez & Jorge Perez-Rodriguez & Simon Sosvilla-Rivero, 2011.
"Implicit bands in the yen/dollar exchange rate,"
Taylor & Francis Journals, vol. 43(10), pages 1241-1255.
- Ilan Goldfajn & Gino Olivares, 2000. "Is adopting Full Dollarization the solution? Looking at the evidence," Textos para discussÃ£o 416, Department of Economics PUC-Rio (Brazil).
- Richard N. Cooper & Jane Sneddon Little, 2000. "U.S. monetary policy in an integrating world: 1960 to 2000," Conference Series ; [Proceedings], Federal Reserve Bank of Boston, vol. 45(Oct), pages 77-121.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Thomas Krichel).
If references are entirely missing, you can add them using this form.