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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

Abstract: 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)
Pages: 19
Date: 2017-10
New Economics Papers: this item is included in nep-hpe, nep-mac, nep-mon and nep-opm
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