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The Flexible Exchange Rate System: Experience and Alternatives

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International Finance and Trade in a Polycentric World

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Abstract

The experience with exchange rates over the last fifteen years has in many ways differed from what was anticipated in 1973 when the major industrialised countries abandoned the effort to keep the values of their currencies fixed. There is a widespread feeling that exchange rates have turned out to be more volatile than they were expected to be, than they should be, and perhaps than they need be. Many practitioners believe that exchange rates are driven by psychological factors and other irrelevant market dynamics, rather than by economic fundamentals. Support has grown in the 1980s for some sort of government action to stabilise currencies, perhaps a reform of the world monetary system.

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Author information

Authors and Affiliations

  1. Massachusetts Institute Of Technology, USA

    Rudiger Dornbusch

  2. University Of California, Berkeley, USA

    Jeffrey Frankel

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  1. Rudiger Dornbusch
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  2. Jeffrey Frankel
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Editors and Affiliations

  1. Centre for Economics and Business, University of Basel, Switzerland

    Silvio Borner

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© 1988 International Economic Association

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Dornbusch, R., Frankel, J. (1988). The Flexible Exchange Rate System: Experience and Alternatives. In: Borner, S. (eds) International Finance and Trade in a Polycentric World. International Economic Association Series. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-09745-6_7

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