The effectiveness of fiscal and monetary policies under fixed and flexible exchange rates: Some empirical evidence for Canada, 1950–1970

1977 ◽  
Vol 113 (3) ◽  
pp. 462-486 ◽  
Author(s):  
Martin F. J. Prachowny
Keyword(s):  
Exchange Rates ◽  
Empirical Evidence ◽  
Monetary Policies ◽  
Flexible Exchange Rates

What Remains of the Case for Flexible Exchange Rates? (Invited Lecture)

1988 ◽  
Vol 27 (4I) ◽  
pp. 425-450 ◽  
Author(s):  
David P. Laidler
Keyword(s):  
Exchange Rates ◽  
Vietnam War ◽  
International Monetary System ◽  
West Germany ◽  
Policy Regime ◽  
Monetary Policies ◽  
Bretton Woods ◽  
Monetary System ◽  
National Governments ◽  
Flexible Exchange Rates

In the 1950s and 1960s, there was much support among academic economists for abandoning the Bretton Woods System in favour of a system of flexible exchange rates. Such proposals had their opponents, of course, some of whom, for example Robert Triffin (l960), believed that, if anything. the Bretton Woods System granted too much, rather than too little, scope to individual national governments to vary their exchange rates. Nevertheless, at that time, the weight of professional opinion was against them, and when exchange rate flexibility was adopted in the 1970s, economists by and large welcomed it. This change in policy regime was not, however, the outcome of reforms undertaken in the light of academic arguments; although these did have some influence in some places, not least the United Kingdom.' Nevertheless, the single most important factor leading to the demise of the Bretton Woods System was not the acceptance of any academic arguments about how to make the international monetary system function more’ smoothly. It was something much more down to earth, namely the unwillingness of certain governments, notably that of West Germany, to accept the balance of payments and hence domestic inflationary consequences of United States fiscal and monetary policies associated with the Vietnam War.

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