Friedman’s Case for Flexible Exchange Rates

Robert Leeson

Chapter 4 in Ideology and the International Economy, 2003, pp 25-28 from Palgrave Macmillan

Abstract: Abstract Friedman advanced floating exchange rates as the only reliable method of facilitating free trade, about which ‘there has been virtual unanimity among economists’. In this way ‘international cartels would disappear’ and the US ‘could come close to eliminating any danger of significant internal monopolies’ (Friedman and Friedman 1980, 60–1, 76–7). Friedman (1953, 158, 164–5, 167, 171, 187, 197) took ‘unrestricted multilateral trade’ as an axiomatic objective: ‘the fundamental requirement is that governments not use restrictions on trade of any kind to protect exchange rates’. The ‘absence of flexible exchange rates is almost certain to be incompatible with unrestricted multilateral trade’.

Keywords: Exchange Rate; Money Supply; Full Employment; Monetary Authority; Flexible Exchange Rate (search for similar items in EconPapers)
Date: 2003
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-28602-3_4

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DOI: 10.1057/9780230286023_4

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