Abstract
The case for flexible rates as made by Friedman (1953) and Johnson (1969) rests on a double claim: flexible rates would provide a more efficient international system of adjustment and hence support a world of freer trade. At the same time they would free domestic monetary and fiscal policy instruments for domestic purposes. The counterargument, specifically by Nurkse (1944), is that flexible rates are tantamount to volatile, unstable rates, a source of disturbance and instability rather than efficient mechanism of adjustment.
This paper draws in part on my ‘Exchange Rate Economics: 1986’, published in the March 1987 issue of the Economic Journal, but additional material has been added.
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© 1990 Rodger Dornbusch
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Dornbusch, R. (1990). Exchange Rate Economics. In: Llewellyn, D., Milner, C. (eds) Current Issues in International Monetary Economics. Current Issues in Economics. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-20983-5_2
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DOI: https://doi.org/10.1007/978-1-349-20983-5_2
Publisher Name: Palgrave Macmillan, London
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