Exchange Rate Behavior During the Great Recession
This paper offers a post-Keynesian/institutionalist explanation of the dollar-euro exchange rate around and during the Great Recession. It is shown that, consistent with theory, the financial sector played a dominant role. Capital flows drove foreign exchange rates, causing both mis-determination and tremendous volatility, and the real economy was forced to adjust to the conditions they created (a line of causation, incidentally, precisely the opposite of that suggested by Neoclassicism). Among the paper's conclusions are that currency price swings were clearly excessive, exchange rate fluctuations contributed to the sluggish recovery, and portfolio capital flows must be strictly controlled if these are to be avoided.
When requesting a correction, please mention this item's handle: RePEc:mes:jeciss:v:46:y:2012:i:2:p:313-322. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ian Winship)or (Chris Nguyen) The email address of this maintainer does not seem to be valid anymore. Please ask Chris Nguyen to update the entry or send us the correct email address
If references are entirely missing, you can add them using this form.