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This PDF is a selection from an out-of-print volume from... Bureau of Economic Research
This PDF is a selection from an out-of-print volume from... Bureau of Economic Research

... currency in a single country where there are alternative assets. This problem was stressed by Keynes (1936) and Samuelson (1947) as the essential difficulty of monetary theory. In the light of these difficulties at the theoretical level, it is remarkable that there is so little difficulty in getting ...
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... Since the inception of exchange rate deregulation in Nigeria, there have been fluctuations in the value of the naira. However, exchange rate of the naira to the US dollars was relatively stable in 2010 (CBN, 2010). The average exchange rate of the naira at the Whole Sale Dutch Auction System (WDAS) ...
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... United States, this might today be called new competitors or new entrants in world manufacturing. Table 5 shows the change in U.S. trade with the NICs since 1981. Part of the $70 billion shift in trade reflects the debt crisis (loss of markets), but a major part is a reflection of the entrance of ne ...
Currency Boards - Cato Institute
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... value of home goods by 2.6 per cent, compared to 0.6 per cent resulting from a rise in the price of non-agricultural exportables. This was to be expected, as the former are partly consumed in the domestic market while the latter are practically all exported. As part of an industrialisation strategy ...
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S0212088_en.pdf

... Argentina was -0.4% while in Hong Kong it was 1.8%. Prices therefore had been contributing towards a real depreciation in Argentina more intensively than in Hong Kong.4 Second, as we shall see, the Chilean band was already suffering lack of credibility over the period considered. Hence, faced to a s ...
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Fixed exchange-rate system

A fixed exchange rate, sometimes called a pegged exchange rate, is a type of exchange rate regime where a currency's value is fixed against either the value of another single currency, to a basket of other currencies, or to another measure of value, such as gold. There are benefits and risks to using a fixed exchange rate. A fixed exchange rate is usually used in order to stabilize the value of a currency by directly fixing its value in a predetermined ratio to a different, more stable or more internationally prevalent currency (or currencies), to which the value is pegged. In doing so, the exchange rate between the currency and its peg does not change based on market conditions, the way floating currencies will do. This makes trade and investments between the two currency areas easier and more predictable, and is especially useful for small economies in which external trade forms a large part of their GDP.A fixed exchange-rate system can also be used as a means to control the behavior of a currency, such as by limiting rates of inflation. However, in doing so, the pegged currency is then controlled by its reference value. As such, when the reference value rises or falls, it then follows that the value(s) of any currencies pegged to it will also rise and fall in relation to other currencies and commodities with which the pegged currency can be traded. In other words, a pegged currency is dependent on its reference value to dictate how its current worth is defined at any given time. In addition, according to the Mundell–Fleming model, with perfect capital mobility, a fixed exchange rate prevents a government from using domestic monetary policy in order to achieve macroeconomic stability.In a fixed exchange-rate system, a country’s central bank typically uses an open market mechanism and is committed at all times to buy and/or sell its currency at a fixed price in order to maintain its pegged ratio and, hence, the stable value of its currency in relation to the reference to which it is pegged. The central bank provides the assets and/or the foreign currency or currencies which are needed in order to finance any payments imbalances.In the 21st century, the currencies associated with large economies typically do not fix or peg exchange rates to other currencies. The last large economy to use a fixed exchange rate system was the People's Republic of China which, in July 2005, adopted a slightly more flexible exchange rate system called a managed exchange rate. The European Exchange Rate Mechanism is also used on a temporary basis to establish a final conversion rate against the Euro (€) from the local currencies of countries joining the Eurozone.
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