Understanding Exchange Rate Volatility Without The Contrivance Of Macroeconomics  

Oleh:

Flood, Robert P. ; Rose, Andrew K.

Jenis: Article from Journal - ilmiah internasional
Dalam koleksi: The Economic Journal (EBSCO) vol. 109 no. 459 (Nov. 1999), page 660-672.
Topik: exchange rates; contrivance; macroeconomics
Fulltext: 660.pdf (370.08KB)

Isi artikel

Friedman's argument is that exchange rate instability is a manifestation of economic volatility. Exchange rate regimes differ in the mechanisms through which this underlying volatility is channelled. For instance, `money supply' or liquidity' shocks affect the nominal exchange rate when rates ¯oat, but the money supply if rates are ®xed. Underlying systemic volatility cannot be reduced by the regime, only channelled to one locus or another. The economy can be thought of as a balloon; squeezing volatility out of one part merely transfers the volatility elsewhere.

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