Abstract
In this journal’s ‘Policy Forum’, Eichengreen, Tobin and Wyplosz (1995, p. 164) (hereafter ETW) argue that volatility in foreign exchange markets due to speculation can have ‘real economic consequences devastating for particular sectors and whole economies’. To constrain ‘speculative behaviour … they (ETW) propose a global transaction tax … to discourage short-term round tripping’ (Greenaway, 1995, p. 160). At the same time that this ETW proposal appeared in print, the winter 1994–5 Mexican peso crisis spilled over into the dollar problem. In international financial markets, where image is often more important than reality, the dollar was dragged down by the peso while the German mark and Japanese yen appeared to be the only safe harbours for portfolio fund managers.
This paper was published in The Economic Journal, 107 (1997). The author is grateful to John Hey and several referees for many helpful suggestions on an earlier draft of this paper.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
References
Davidson, P. (1991), ‘Is Probability Theory Relevant for Uncertainty? A Post Keynesian Perspective’, Journal of Economic Perspectives, 5, pp. 29–43.
Eichengreen, B. Tobin, J. and Wyplosz, C. (1995), ‘The Case for Sand in the Wheels of International Finance’, Economic Journal, 105, pp. 162–72.
Garber, P. and Taylor, M. P. (1995), ‘Sand in the Wheels of Foreign Exchange Markets: A Skeptical Note’, Economic Journal, 105, pp. 173–81.
Greenaway, D. (1995), ‘Policy Form: Sand in the Wheels of International Finance, Editorial Note’, Economic Journal, 105, pp. 160–1.
Hicks, J. R. (1935), ‘A Suggestion for Simplifying the Theory of Money’, Economica, 2, pp. 1–19.
Reprinted in Hicks, J. R. (1967), Critical Essays in Monetary Theory (Oxford: Clarendon Press). All references are to the reprint.
Kahn, R. (1954), ‘Some Notes on Liquidity Preference’, Manchester School, 22, pp. 227–45).
Reprinted in Kahn, R. (1972), Selected Essays on Employment and Growth (Cambridge: Cambridge University Press). All references are to the reprint.
Kelly, R. (1994), ‘A Framework for European Exchange Rates in the 1990s’, in J. G. Smith and J. Michie (eds), Unemployment in Europe (London: Academic Press).
Kenen, P. (1995), ‘Capital Controls, the EMS and the EMU’, Economic Journal, 105, pp. 198–92.
Keynes, J. M. (1930), A Treatise on Money, vol. 2 (London: Macmillan).
Keynes, J. M. (1980), The Collected Writings of John Maynard Keynes, vol. XXV, by D. Moggridge (ed.) (London: Macmillan).
Mathews, R. C. O. (1963), ‘Expenditure Plans and the Uncertainty Motive for Holding Money’, Journal of Political Economy, 71, pp. 201–18.
Williamson, J. (1987), ‘Exchange Rate Management: The Role of Target Zones’, American Economic Review Papers and Proceedings, 87, pp. 200–4.
Editor information
Copyright information
© 1999 Paul Davidson
About this chapter
Cite this chapter
Davidson, L. (1999). Are Grains of Sand in the Wheels of International Finance Sufficient to do the Job when Boulders are often Required?. In: Davidson, L. (eds) Uncertainty, International Money, Employment and Theory. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-14991-9_8
Download citation
DOI: https://doi.org/10.1007/978-1-349-14991-9_8
Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-1-349-14993-3
Online ISBN: 978-1-349-14991-9
eBook Packages: Palgrave Economics & Finance CollectionEconomics and Finance (R0)