The Case for Flexible Exchange Rates in 1980

Abstract

Flexible exchange rates have never commanded universal support among economists, but it is fair to say that they found more enthusiastic adherents during the 1950s and 1960s, when a (more or less) fixed-exchange-rate regime was in force, than they do now, after close to a decade of experience with them. In this chapter, I seek to contribute to the ongoing debate about flexible exchange rates in a number of ways. First, I shall review briefly the by now well-known arguments about fixed and flexible exchange rates that monetary economics in and of itself permits us to develop. Second, I shall consider what may loosely be termed the political arguments about ‘discipline’, or lack thereof, in the conduct of policy that alternative exchange-rate regimes are said to promote, in the light of the experience of the 1970s. I shall pay particular attention here to British experience. Finally, I shall consider the issues raised in the first two substantive sections of this paper from a more general perspective, and will argue that there still remains a powerful case to be made for flexible exchange rates as a means of organising international monetary relations. The case however is essentially political rather than economic. These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

Cite this work

No public copy is stored for this record, so only the metadata is cited.

Stored only when both papers are in the corpus — 16 citations exist upstream.

Papers that cite the same references — the relational fallback while embeddings are still backfilling.