INTEREST RATE VOLATILITY AND EXCHANGE RISK: NEW RULES FOR A COMMON MONETARY STANDARD

Ronald McKinnon

Contemporary Economic Policy, 1990, vol. 8, issue 2, 1-17

Abstract: How does the choice of an exchange rate regime influence the volatility of interest rates? Are floating exchange rates useful “shock absorbers” that dampen fluctuations in domestic interest rates and prices or do they create additional risk that increases interest rate volatility and segments the international capital market? The answers are best seen in historical perspective.

Date: 1990
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