Chapter 19 Macroeconomic Policy and Coordination under Floating Exchange Rates 国际财务相关管理课件.pptVIP

19-5 Are Fixed Exchange Rates Even an Option for Most Countries? Maintaining fixed exchange rates in the long-run requires strict controls over capital movements. Attempts to fix exchange rates will necessarily lack credibility and be relatively short-lived. Fixed rates will not deliver the benefits promised by their proponents. 19-6 Directions for Reform The experience of floating does not fully support either the early advocates of that exchange rate system or its critics. One unambiguous lesson of experience is that no exchange rate system functions well when international economic cooperation breaks down. Severe limits on exchange rate flexibility are unlikely to be reinstated in the near future. Increased consultation among policymakers in the industrial countries should improve the performance of floating rates. Summary The weaknesses of the Bretton Woods system led many economists to advocate floating exchange rates before 1973 based on three arguments: Floating rates would give countries greater autonomy in managing their economies. Floating rates would remove the asymmetries of the Bretton Woods system. Floating rates would quickly eliminate the “fundamental disequilibriums.” Summary Critics of floating rates advanced several counterarguments: Floating would encourage monetary and fiscal excesses and beggar-thy-neighbor policies. Floating rates would be subject to destabilizing speculation and retard international trade and investment. Summary Between 1973 and 1980 floating rates seemed on the whole to function well. A sharp turn toward slower monetary growth in the U.S. contributed to massive dollar appreciation between 1980 and early 1985. The experience of floating does not fully support either the early advocates of that exchange rates system or its critics. Foreign Home Very restrictive Very restrictive Somewhat restrictive Somewhat restrictive ??* = -1% ?U* = 1% ?? = -1% ?U = 1% Figure 19A-1: Hypothetical Effects of Different Monetary Policy