Exchange Rate Regimes and Macroeconomic Stability: The Case of Sweden 1972-1996

Anders Bergvall ()
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Anders Bergvall: Department of Economics, Postal: Uppsala University, P.O. Box 513, SE-751 20 Uppsala, Sweden

No 2000:25, Working Paper Series from Uppsala University, Department of Economics

Abstract: In this paper I investigate the relevance of the exchange rate regime for macroeconomic stability. I simulate hypothetical macroeconomic developments under different regimes in Sweden during the period 1972 -1996. The main question is how stable output would have been if Sweden had had a floating exchange rate regime. Would it have been better with a floating exchange rate than the actual quasi-fixed regime? Also the development with an irrevocably fixed exchange rate is investigated. The results indicate that the central bank can stabilize much of the macroeconomic disturbances under a floating exchange rate, but still the volatility of the macroeconomic variables under the hypothetical floating exchange rate regime is about the same as under the actual quasi-fixed regime.

Keywords: Exchange rate regimes; macroeconomic stability; monetary policy (search for similar items in EconPapers)
JEL-codes: E52 F31 F41 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2000-12-15
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Published in Oxford Economic papers-New series 57, 2005, pages 422-446.

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