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Exchange Rate Regimes and Macroeconomic Stability: The Case of Sweden 1972-1996

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  • Bergvall, Anders

    (Department of Economics)

Abstract

In this paper I investigate the relevance of the exchange rate regime for macroeconomic stability. I simulate hypothetical macroeconomic developments under different regimes in Sweden during the period 1972 -1996. The main question is how stable output would have been if Sweden had had a floating exchange rate regime. Would it have been better with a floating exchange rate than the actual quasi-fixed regime? Also the development with an irrevocably fixed exchange rate is investigated. The results indicate that the central bank can stabilize much of the macroeconomic disturbances under a floating exchange rate, but still the volatility of the macroeconomic variables under the hypothetical floating exchange rate regime is about the same as under the actual quasi-fixed regime.

Suggested Citation

  • Bergvall, Anders, 2000. "Exchange Rate Regimes and Macroeconomic Stability: The Case of Sweden 1972-1996," Working Paper Series 2000:25, Uppsala University, Department of Economics.
    • Handle: RePEc:hhs:uunewp:2000_025
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    References listed on IDEAS

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    Cited by:

    1. Paul Soderlind, 2004. "What if the Fed had been an inflation nutter?," Applied Economics, Taylor & Francis Journals, vol. 36(13), pages 1471-1473.
    2. Vinhas de Souza, Lúcio & Ledrut, Elisabeth, 2002. "Alternative Paths Towards EMU: Lessons from an Expanded Mundell-Fleming Model for the Accession Countries," Kiel Working Papers 1132, Kiel Institute for the World Economy (IfW Kiel).
    3. Annika Alexius & Erik Post, 2008. "Exchange rates and asymmetric shocks in small open economies," Empirical Economics, Springer, vol. 35(3), pages 527-541, November.
    4. Pontus Mattsson & Jonas Månsson & William H. Greene, 2020. "TFP change and its components for Swedish manufacturing firms during the 2008–2009 financial crisis," Journal of Productivity Analysis, Springer, vol. 53(1), pages 79-93, February.
    5. Pontus Mattsson & Jonas Mansson & William H. Greene, 2018. "TFP Change and its Components for Swedish Manufacturing Firms During the 2008-2009 Financial Crisis," Working Papers 18-27, New York University, Leonard N. Stern School of Business, Department of Economics.

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    More about this item

    Keywords

    Exchange rate regimes; macroeconomic stability; monetary policy;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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