Monetary Control and the Crawling Peg
Why have several less developed countries, but no industrial economies, adopted a crawling peg? As Williamson notes (Chapter 1 above), academic discussion in the 1960s and 1970s was centred on applying the crawling peg to industrial economies as a modification of the dollar-based Bretton Woods method of setting official parities. Yet since 1973 many industrial economies have opted for floating, and none for crawling. Correspondingly, no less developed countries (LDCs), who typically limit the convertibility of their currencies, have opted for free floating; but since 1965 several have allowed their official parities to crawl smoothly downwards through time.
KeywordsExchange Rate Monetary Policy Foreign Exchange Foreign Trade Real Exchange Rate
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