Fixed Exchange Rates as a Means to Price Stability: What Have We Learned / Lars E.O. Svensson.

Format:

Book

Author/Creator:

Svensson, Lars E.O.

Contributor:

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w4504.

NBER working paper series no. w4504

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Fixed Exchange Rates as a Means to Price Stability

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1993.

Summary:

The paper discusses what we have learned from last year's currency crises in ERM and the Nordic countries about fixed exchange rates as a means to achieve price stability. After discussing the explanations for the crises, the paper concludes that fixed exchange rates are not a shortcut to price stability. Monetary stability and credibility have to be built at home and cannot easily be imported from abroad. Fixed exchange rates are more fragile and difficult to maintain than previously thought. They may even be in conflict with price stability, by inducing a procyclical destabilizing monetary policy, and by inducing an inflation bias. Building monetary credibility is even more important with flexible exchange rates.

Notes:

Print version record

October 1993.