The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Flexible Exchange Rates

  • R. Driskill
Reference work entry


Flexible exchange rates are market determined prices of foreign exchange which move in response to supply and demand and are not pegged within narrow bands by official purchases. Flexible systems where there are no official purchases are usually called pure floating regimes, and systems with some official purchases are called managed floating regimes. The counterpart to flexible exchange rates are fixed exchange rates, where official central bank purchases or sales of foreign currencies maintain the exchange rate within narrow bands.

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  1. Frankel, J.A. 1983. Monetary and portfolio balance models of exchange rate determination. In Economic interdependence and flexible exchange rates, ed. J. Bhandari and B. Putnam, 84–115. Cambridge: MIT Press.Google Scholar
  2. Friedman, M. 1953. The case for flexible exchange rates. In Essays in positive economics, ed. M. Friedman, 157–203. Chicago: University of Chicago Press.Google Scholar

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© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • R. Driskill
    • 1
  1. 1.