Using National Currencies in International Transactions: The Case for Flexible Exchange Rates

Basil John Moore

Chapter 18 in Shaking the Invisible Hand, 2006, pp 409-432 from Palgrave Macmillan

Abstract: Abstract After the demise of Bretton Woods the world trading system has been characterized by lower growth, higher inflation, gyrating exchange rates, recurring international liquidity crises and secularly rising rates of unemployment. In the process a variety of flexible exchange rate regimes have evolved. These have created perverse incentives to compete for limited reserves, set trading partner against trading partner and perpetuated the stagnant world economy that Keynes had so presciently anticipated. The resulting degree of exchange rate volatility has been greater than ever previously experienced. Economic performance, whether measured in terms of growth rates or unemployment rates was dramatically below the exceptionally strong experience of the Bretton Woods period under fixed exchange rates.

Keywords: Exchange Rate; Interest Rate; Gross Domestic Product; Aggregate Demand; Exchange Rate Regime (search for similar items in EconPapers)
Date: 2006
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-51213-9_18

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DOI: 10.1057/9780230512139_18

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