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Exchange Rate Regimes: Is the Bipolar View Correct?

  • Stanley Fischer
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    The bipolar or two-corner solution view of exchange rates is that intermediate policy regimes between hard pegs and floating are not sustainable. This paper argues that the proponents of the bipolar view have probably exaggerated their point. The right statement is that for countries open to international capital flows, softly pegged exchange rates are crisis-prone and not sustainable over long periods. However, a wide variety of flexible rate arrangements remains possible. Monetary and exchange rate policy in most countries should not and will not be indifferent to exchange rate movements.

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    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jep.15.2.3
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    Article provided by American Economic Association in its journal Journal of Economic Perspectives.

    Volume (Year): 15 (2001)
    Issue (Month): 2 (Spring)
    Pages: 3-24

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    Handle: RePEc:aea:jecper:v:15:y:2001:i:2:p:3-24
    Note: DOI: 10.1257/jep.15.2.3
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    20. Akira Ariyoshi & Andrei Kirilenko & Inci Ötker & Bernard Laurens & Jorge Iván Canales Kriljenko & Karl Friedrich Habermeier, 2000. "Capital Controls: Country Experiences with Their Use and Liberalization," IMF Occasional Papers 190, International Monetary Fund.
    21. Barry J. Eichengreen & Inci Ötker & A. Javier Hamann & Esteban Jadresic & R. B. Johnston & Hugh Bredenkamp & Paul R. Masson, 1998. "Exit Strategies: Policy Options for Countries Seeking Exchange Rate Flexibility," IMF Occasional Papers 168, International Monetary Fund.
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