Crawling Bands or Monitoring Bands: How to Manage Exchange Rates in a World of Capital Mobility

John Williamson

No PB99-03, Policy Briefs from Peterson Institute for International Economics

Abstract: If the foreign exchange market behaved as it is assumed to do in economics textbooks, with ubiquitous rational expectations the driving force, it is indeed difficult to imagine why anyone would not want to allow the exchange rate to float (at least for countries that do not satisfy the conditions to be part of an optimum currency area). Since most economists like to assume that their models do indeed describe the real world, to some reasonable approximation, it is not difficult to understand the appeal of floating to the profession.

Date: 1999-02
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Journal Article: Crawling Bands or Monitoring Bands: How to Manage Exchange Rates in a World of Capital Mobility (1998)
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