The Stabilizing Properties of Floating Exchange Rates: Some International Evidence

Anders Bergvall ()
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Anders Bergvall: Department of Economics, Postal: Uppsala University, P.O. Box 513, SE-751 20 Uppsala, Sweden

No 2002:14, Working Paper Series from Uppsala University, Department of Economics

Abstract: This paper analyzes the stabilizing properties of alternative monetary policy regimes. In practice there is a choice between two broad types of monetary policy regimes: a fixed exchange rate regime or a floating exchange rate regime. In this paper I compare exchange rate targeting with different floating exchange rate regimes: strict price level targeting, flexible price level targeting and output gap targeting. The paper also evaluates the actual choice of monetary policy regime for seven countries with a pure floating exchange rate regime. In most cases the actual regime can be described as flexible price level targeting. The results suggest that flexible and strict price level targeting gives lower real and nominal variability than both exchange rate targeting and output gap targeting.

Keywords: Monetary policy; exchange rates; macroeconomic stability (search for similar items in EconPapers)
JEL-codes: E52 F31 F41 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2002-08-18
New Economics Papers: this item is included in nep-cba, nep-ifn and nep-rmg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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