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Milton Friedman and Exchange Rates in Developing Countries

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  • Sebastian Edwards

Abstract

Milton Friedman’s famous 1953 essay, “The case for flexible exchange rates,” deals entirely with advanced nations. An interesting question is what Friedman thought about exchange rate and monetary regimes in emerging economies. In this paper I investigate how his views on the subject evolved through time. I analyze speeches, articles, and interviews. I examine his archives for correspondence and unpublished manuscripts. I show that for him flexible rates were a second best solution for middle income and poor nations. I also analyze Friedman’s role in Chile’s failed attempt, during the Pinochet regime, at using a fixed exchange rate to stabilize the economy and eliminate inflation.

Suggested Citation

  • Sebastian Edwards, 2020. "Milton Friedman and Exchange Rates in Developing Countries," NBER Working Papers 27975, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:27975
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    Cited by:

    1. Nikolay NENOVSKY, 2022. "Theoretical Foundations of the Dependent Monetary Regimes," Business & Management Compass, University of Economics Varna, issue 3-4, pages 113-133.
    2. Ni, Yinan & Barth, James R. & Sun, Yanfei, 2022. "On the dynamic capital structure of nations: Theory and empirics," Research in International Business and Finance, Elsevier, vol. 62(C).

    More about this item

    JEL classification:

    • B17 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - International Trade and Finance
    • B2 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925
    • B22 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Macroeconomics
    • B27 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - International Trade and Finance
    • B3 - Schools of Economic Thought and Methodology - - History of Economic Thought: Individuals
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements

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