Milton Friedman and the case for flexible exchange rates and monetary rules
Harris Dellas () and
George Tavlas ()
No 236, Working Papers from Bank of Greece
Milton Friedman was a strong proponent of flexible exchange rates accompanied by a domestic monetary rule. He believed that such a combination would deliver superior economic performance and would also be more consistent with democratic principles than a regime based on fixed exchange rates and discretionary monetary policy. John Taylor’s recent proposal of a rules-based international monetary system –- based on flexible exchange rates and a Taylor rule for each country - is very much in that spirit and represents a modern rendition of Friedman’s views. Under both the Friedman and Taylor proposals, instead of policy coordination among countries there would be policy harmonization.
Keywords: exchange rate systems; monetary rules; Taylor Rule. (search for similar items in EconPapers)
JEL-codes: F02 F33 E52 (search for similar items in EconPapers)
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