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Fixing Exchange Rates: A Virtual Quest for Fundamentals

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  • Flood, Robert P
  • Rose, Andrew K

Abstract

Fixed exchange rates are less volatile than floating rates. The volatility of macroeconomic variables, such as money and output, does not change very much across exchange rate regimes, however. This suggests that exchange rate models based only on macroeconomic fundamentals are unlikely to be very successful. It also suggests that there is no clear trade-off between reduced exchange rate volatility and macroeconomic stability.

Suggested Citation

  • Flood, Robert P & Rose, Andrew K, 1993. "Fixing Exchange Rates: A Virtual Quest for Fundamentals," CEPR Discussion Papers 838, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:838
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    More about this item

    Keywords

    Exchange Rates; Fixed; Floating; Monetary; Regime; Structural; Traditional; Volatility;
    All these keywords.

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions

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