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Crawling Bands or Monitoring Bands: How to Manage Exchange Rates in a World of Capital Mobility

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  • John Williamson

    () (Peterson Institute for International Economics)

Abstract

If the foreign exchange market behaved as it is assumed to do in economics textbooks, with ubiquitous rational expectations the driving force, it is indeed difficult to imagine why anyone would not want to allow the exchange rate to float (at least for countries that do not satisfy the conditions to be part of an optimum currency area). Since most economists like to assume that their models do indeed describe the real world, to some reasonable approximation, it is not difficult to understand the appeal of floating to the profession.

Suggested Citation

  • John Williamson, 1999. "Crawling Bands or Monitoring Bands: How to Manage Exchange Rates in a World of Capital Mobility," Policy Briefs PB99-03, Peterson Institute for International Economics.
  • Handle: RePEc:iie:pbrief:pb99-03
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