scholarly journals Exchange Rate Uncertainty and Labour Market Adjustment Under Fixed and Flexible Exchange Rates

2002 ◽  
Author(s):  
Michael Funke ◽  
Yu-Fu Chen
Keyword(s):  
Exchange Rate ◽  
Exchange Rates ◽  
Labour Market ◽  
Exchange Rate Uncertainty ◽  
Flexible Exchange Rates

The U.S. and the emergence of flexible exchange rates: an analysis of foreign policy change

1979 ◽  
Vol 33 (1) ◽  
pp. 57-81 ◽  
Author(s):  
John S. Odell
Keyword(s):  
Exchange Rate ◽  
Exchange Rates ◽  
Policy Change ◽  
Exchange Rate Flexibility ◽  
Bretton Woods ◽  
Mixed Regime ◽  
International Monetary Arrangements ◽  
Foreign Policy Change ◽  
Flexible Exchange Rates ◽  
The U.S

International monetary arrangements in effect since the Bretton Woods conference of 1944 underwent major changes in the early 1970s, most notably from the norm and practice of “fixed” exchange rates to a new mixed regime in which major rates are now flexible. The outcome strongly reflected the external monetary behavior of the U.S. government, which changed dramatically with the “Nixon shocks” of August 1971 and again with a second devaluation of the dollar in February 1973. Since then the U.S. has officially advocated the once-heretical policy of exchange-rate flexibility.

Currency Fluctuations in the Post-Bretton Woods Era

1990 ◽  
Vol 4 (1) ◽  
pp. 117-134 ◽  
Author(s):  
Richard Meese
Keyword(s):  
Exchange Rate ◽  
Exchange Rates ◽  
Developed Countries ◽  
Currency Markets ◽  
Rate System ◽  
Explanatory Variables ◽  
Bretton Woods ◽  
Exchange Rate Changes ◽  
Hybrid Regime ◽  
Flexible Exchange Rates

The international monetary landscape that has emerged since the felling of Bretton Woods is characterized by a hybrid exchange rate system that lies somewhere between the textbook polar cases of a gold standard and a pure float. This system has relatively flexible exchange rates between major countries, active central bank intervention in the market for the major currencies, and predominantly fixed exchange rates (relative to the dollar or to some basket of currencies) for less developed countries and newly industrializing nations. The majority of research on currency markets since the early 1970s has focused on the characteristics of flexible exchange rates under this hybrid regime. My thesis is that this research has been unsuccessful. The proportion of (monthly or quarterly) exchange rate changes that current models can explain is essentially zero. Even after-the-fact forecasts that use actual values (instead of forecasted values) of the explanatory variables cannot explain major currency movements over the post-Bretton Woods era. This result is quite surprising.

Exchange rate bands of inaction and hysteresis in EU exports to the global economy

2019 ◽  
Vol 46 (2) ◽  
pp. 335-355 ◽  
Author(s):  
Ansgar Belke ◽  
Dominik Kronen
Keyword(s):  
Exchange Rate ◽  
Exchange Rates ◽  
Export Performance ◽  
Real Exchange Rates ◽  
Policy Uncertainty ◽  
Exchange Rate Uncertainty ◽  
Content Type ◽  
The Usa ◽  
The Uk ◽  
The Eu

Purpose The purpose of this paper is to estimate the effect of policy and exchange rate uncertainty shocks on EU countries’ exports to the world economy. The authors examine the performance of the four biggest economies, namely Germany, France, Italy and the UK, under policy and exchange rate uncertainty in exports to some of the most important global export destinations (the USA, Japan, Brazil, Russia and China). Design/methodology/approach For this purpose, the authors apply a non-linear model, where suddenly strong spurts of exports occur when changes of the exchange rate go beyond a zone of inaction, which the authors call “play” area – analogous to mechanical play. The authors implement an algorithm describing path-dependent play hysteresis into a regression framework. The hysteretic impact of real exchange rates on exports is estimated based on the period from 1995M1 to 2015M12. Findings Looking at some of the main export destinations of the selected EU member countries, the USA, Japan and some of the members of BRICS (Brazil, Russia and China), the authors identify significant hysteretic effects for a large part of the EU member countries’ exports. The authors find that their export activity is characterized by “bands of inaction” with respect to changes in the real exchange. To check for robustness, the authors estimate export equations for limited samples: excluding the recent financial crisis and excluding the period up to the burst of the dotcom bubble and September 11. In addition, the authors employ an economic policy uncertainty variable and an exchange rate uncertainty variable as determinants of the width of the area of weak reaction of exports. Research limitations/implications Overall, the authors find that those specifications which take uncertainty into account display the highest goodness of fit, with economic policy uncertainty dominating exchange rate uncertainty. In other words, the option value of waiting dominates the real exchange rate effect on the EU member countries’ exports. Practical implications The existence of “bands of inaction” (called “play”) in EU member countries’ exports should lead to a more objective discussion of peaks and troughs in those countries’ real exchange rates and, more specifically, of the relevance of internal and external devaluation and other indicators to gain international competitiveness on exports in political debates. If policy and/or exchange rate uncertainty are diminished, one may expect an earlier boost in exports, if the home currency is devaluing in real terms. Social implications The results are useful as arguments in the debate about exchange rate pain threshold vs export triggers. Originality/value The authors focus on the export performance of the four biggest economies in the European Union, namely Germany, France, Italy and the UK. The authors examine their respective export performance, as an innovation, under policy and exchange rate uncertainty and, for this purpose, look at some of the most important global export destinations (the USA, Japan and the BRICS (Brazil, Russia and China)). The authors do so, also as an innovation, by differentiating between intervals of weak and strong reaction of their exports to real exchange rate changes.

Transition to Flexible Exchange Rates

1981 ◽  
Vol 33 (2) ◽  
pp. 299-320
Author(s):  
Louka T. Katseli-Papaefstratiou
Keyword(s):  
Exchange Rate ◽  
Exchange Rates ◽  
Exchange Rate Regime ◽  
Exchange Rate Volatility ◽  
Developed Countries ◽  
Policy Formulation ◽  
Policy Implications ◽  
Long Run ◽  
Short Run ◽  
Flexible Exchange Rates

In the process of reviewing three recent books on international monetary developments, this article focuses on both positive and normative aspects of the “exchange-rate crisis” and its effects on policy formulation in both developed and developing countries. It attributes short-run exchange rate volatility mainly to shifts in expectations and movements in international interest rate differentials; at the same time, it links long-run exchange rate movements to the current account positions of various countries. The article also focuses on the policy implications of such volatility in a world characterized by real as opposed to monetary disturbances and discusses the alternatives open to policy makers in that context. Finally, it critically evaluates the argument that flexible exchange rates among industrialized countries have benefited the less developed countries, and discusses the implications of these developments for their choice of exchange-rate regime.

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