The International Monetary System - Dokuz Eylül …：国际货币体系- Dokuz EylüL….ppt

Supply (S) Demand (D) Demand (D*) D = S Dollar depreciates (flexible regime) Q of ￡ Dollar price per ￡ (exchange rate) $1.60 $1.40 Instead, suppose the exchange rate is “fixed” at $1.40/￡, and thus the imbalance between supply and demand cannot be eliminated by a price change. The government would have to shift the demand curve from D to D* In this example this corresponds to contractionary monetary and fiscal policies. Supply (S) Demand (D) Demand (D*) D* = S Contractionary policies (fixed regime) Q of ￡ Dollar price per ￡ (exchange rate) $1.40 * 2-* 2-* 2-* 2-* Evolution of the International Monetary System Current Exchange Rate Arrangements European Monetary System Euro and the European Monetary Union Fixed versus Flexible Exchange Rate Regimes Bimetallism: Before 1875 Classical Gold Standard: 1875-1914 Interwar Period: 1915-1944 Bretton Woods System: 1945-1972 The Flexible Exchange Rate Regime: 1973-Present A “double standard” in the sense that both gold and silver were used as money. Some countries were on the gold standard, some on the silver standard, some on both. Both gold and silver were used as international means of payment and the exchange rates among currencies were determined by either their gold or silver contents. Gresham’s Law implied that it would be the least valuable metal that would tend to circulate. During this period in most major countries: Gold alone was assured of unrestricted coinage There was two-way convertibility between gold and national currencies at a stable ratio. Gold could be freely exported or imported. The exchange rate between two country’s currencies would be determined by their relative gold contents. For example, if the dollar is pegged to gold at U.S.$30 = 1 ounce of gold, and the British pound is pegged to gold at ￡6 = 1 ounce of gold, it must be the case that the exchange rate is determined by the relative gold contents: $30 = ￡6 $5 = ￡1 Highly stable exchange rates under the classical gold standard provided an env