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Two Notes on Indeterminacy Problems

Author

Listed:
  • Robert P. Flood
  • Peter M. Garber
  • Louis O. Scott

Abstract

In this paper we show, in an example, that the arbitrary behavior which results in an indeterminacy in the time path of a flexible exchange rate and is associated with "badly behaved" speculation has a manifestation under a regime of fixed rates in an indeterminacy in the time path of government holding of international reserves. Thus, to the extent that arbitrariness is characteristic of agents' behavior it is not resolve6 but only masked by the fixing of exchange rates.

Suggested Citation

  • Robert P. Flood & Peter M. Garber & Louis O. Scott, 1982. "Two Notes on Indeterminacy Problems," NBER Working Papers 0841, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:0841
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    References listed on IDEAS

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    1. Berndt, Ernst R & Savin, N Eugene, 1977. "Conflict among Criteria for Testing Hypotheses in the Multivariate Linear Regression Model," Econometrica, Econometric Society, vol. 45(5), pages 1263-1277, July.
    2. Brock, William A, 1974. "Money and Growth: The Case of Long Run Perfect Foresight," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 15(3), pages 750-777, October.
    3. Flood, Robert P & Garber, Peter M, 1980. "Market Fundamentals versus Price-Level Bubbles: The First Tests," Journal of Political Economy, University of Chicago Press, vol. 88(4), pages 745-770, August.
    4. Salemi, Michael K & Sargent, Thomas J, 1979. "The Demand for Money during Hyperinflation under Rational Expectations: II," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 20(3), pages 741-758, October.
    5. Lucas, Robert E, Jr, 1980. "Equilibrium in a Pure Currency Economy," Economic Inquiry, Western Economic Association International, vol. 18(2), pages 203-220, April.
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    Cited by:

    1. Erwin W. Heri, 1986. "Irrationales rational gesehen: Eine Übersicht über die Theorie der "Bubbles"," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 122(II), pages 163-186, June.
    2. Behzad T. Diba & Herschel I. Grossman, 1985. "Rational Bubbles in Stock Prices?," NBER Working Papers 1779, National Bureau of Economic Research, Inc.

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