Fixed and Flexible Rates: A Renewal of The Debate / Jacques R. Artus, John H. Young.

Format:

Book

Author/Creator:

Artus, Jacques R.

Contributor:

National Bureau of Economic Research.

Young, John H.

Series:

Working Paper Series (National Bureau of Economic Research) no. w0367.

NBER working paper series no. w0367

Language:

English

Subjects (All):

Foreign exchange rates.

Foreign exchange market.

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Fixed and Flexible Rates

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1979.

Cambridge, Massachusetts : National Bureau of Economic Research, 1979.

Summary:

The paper reviews the extent to which a decade of analysis and experience has altered thinking about the choice of an exchange rate system. The advantages of flexible rates are viewed to have been exaggerated. They do not permit governments to have permanently higher rates of economic activity at the expense of higher inflation as some thought. Further, the slow speed of adjustment to relative price changes limits the contribution of flexible rates to external adjustment in the short-run, and the degree of insulation from external influences that they provide. Finally, flexible rates tend to be fluctuating rates, and, although there is little empirical evidence so far showing that the fluctuations have had adverse effects on trade and capital flows, the exchange rate instability more than any other factor has led to a certain disillusionment with the floating rate system. Notwithstanding the drawbacks of flexible rates, there will be a continuing need for exchange rate flexibility over the next few years, and some analysis is given of the problems of achieving greater stability under flexible rates or the requisite amount of flexibility under pegged rates.

Notes:

Print version record

June 1979.