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The International Monetary System: An Analysis of Alternative Regimes

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  • Miller, Marcus
  • Williamson, John

Abstract

This is an exercise in the positive economics of alternative monetary regimes. The behaviour of output and prices is compared using a stochastic specification which allows asymptotic variances to be obtained without difficulty. Free floating of exchange rates together with national money supply targets is analysed first, with and without the presence of `fads' in the exchange rate. Two alternatives for monetary coordination are then considered. First, McKinnon's proposal to fix nominal exchange rates and stabilize aggregate monetary growth (or average inflation); second, Williamson's system of Target Zones for stable real exchange rates, complemented by nominal income targets for fiscal policy.

Suggested Citation

  • Miller, Marcus & Williamson, John, 1988. "The International Monetary System: An Analysis of Alternative Regimes," CEPR Discussion Papers 266, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:266
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    References listed on IDEAS

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    1. Taylor, John B., 1985. "International coordination in the design of macroeconomic policy rules," European Economic Review, Elsevier, vol. 28(1-2), pages 53-81.
    2. Willem H. Buiter, 1988. "Macroeconomic Policy Design in an Interdependent World Economy: An Analysis of Three Contingencies," NBER Chapters, in: International Aspects of Fiscal Policies, pages 121-172, National Bureau of Economic Research, Inc.
    3. M. Mufakharul Islam, 1986. "Discussion," The Indian Economic & Social History Review, , vol. 23(2), pages 217-226, June.
    4. Dornbusch, Rudiger, 1976. "Expectations and Exchange Rate Dynamics," Journal of Political Economy, University of Chicago Press, vol. 84(6), pages 1161-1176, December.
    5. Edison, Hali J. & Miller, Marcus H. & Williamson, John, 1987. "On evaluating and extending the target zone proposal," Journal of Policy Modeling, Elsevier, vol. 9(1), pages 199-224.
    6. Levine, Paul & Currie, David, 1985. "Optimal feedback rules in an open economy macromodel with rational expectations," European Economic Review, Elsevier, vol. 27(2), pages 141-163, March.
    7. Buiter, Willem H & Miller, Marcus, 1981. "Monetary Policy and International Competitiveness: The Problems of Adjustment," Oxford Economic Papers, Oxford University Press, vol. 33(0), pages 143-175, Supplemen.
    8. Rudiger Dornbusch & Ernesto Hernández-Catá & Willem H. Buiter, 1983. "Flexible Exchange Rates and Interdependence [with Comments] (Taux de change flexibles et interdépendance) (Tipos de cambio flexibles e interdependencia)," IMF Staff Papers, Palgrave Macmillan, vol. 30(1), pages 3-38, March.
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    Cited by:

    1. John B. Taylor, 1989. "Policy Analysis With a Multicountry Model," NBER Working Papers 2881, National Bureau of Economic Research, Inc.
    2. Miller, Marcus & Weller, Paul & Williamson, John, 1989. "The Stabilizing Properties Of Target Zones," Economic Research Papers 268352, University of Warwick - Department of Economics.
    3. Victor Argy & Anthony Brennan & Glenn Stevens, 1990. "Monetary Targeting: The International Experience," The Economic Record, The Economic Society of Australia, vol. 66(1), pages 37-62, March.
    4. Andrew Hughes-Hallett & Patrick Minford, 1990. "Target zones and exchange rate management: A stability analysis of the European Monetary System," Open Economies Review, Springer, vol. 1(2), pages 175-200, June.

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