 The Exchange Rate, The Balance Of Payments and Monetary and Fiscal Policy Under A Regime of Controlled FloatingA chapter in Flexible Exchange Rates and Stabilization Policy, 1977, pp 97-116 from Palgrave Macmillan Abstract: Abstract This paper considers the extension of the fundamental principles of the monetary approach to balance of payments analysis to a regime of floating exchange rates, with active intervention by the authorities to control rate movements. It makes four main points. First, the exchange rate is the relative price of different national monies, rather than national outputs, and is determined primarily by the demands and supplies of stocks of different national monies. Second, exchange rates are strongly influenced by asset holder’s expectations of future exchange rates and these expectations are influenced by beliefs concerning the future course of monetary policy. Third, “real” factors, as well as monetary factors, are important in determining the behavior of exchange rates. Fourth, the problems of policy conflict which exist under a system of fixed rates are reduced, but not eliminated, under a regime of controlled floating. A brief appendix develops some of the implications of “rational expectations” for the theory of exchange rates. Keywords: Exchange Rate; Monetary Policy; Foreign Exchange; Fiscal Policy; Money Supply (search for similar items in EconPapers) There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-349-03359-1_9 Ordering information: This item can be ordered from DOI: 10.1007/978-1-349-03359-1_9 Access Statistics for this chapter More chapters in Palgrave Macmillan Books from Palgrave Macmillan |
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