Working Paper Series, Department of Economics, Uppsala University
No 2002:14:
The Stabilizing Properties of Floating Exchange Rates: Some International Evidence
Anders Bergvall ()
Abstract: This paper analyzes the stabilizing properties of
alternative monetary policy regimes. In practice there is a choice between
two broad types of monetary policy regimes: a fixed exchange rate regime or
a floating exchange rate regime. In this paper I compare exchange rate
targeting with different floating exchange rate regimes: strict price level
targeting, flexible price level targeting and output gap targeting. The
paper also evaluates the actual choice of monetary policy regime for seven
countries with a pure floating exchange rate regime. In most cases the
actual regime can be described as flexible price level targeting. The
results suggest that flexible and strict price level targeting gives lower
real and nominal variability than both exchange rate targeting and output
gap targeting.
Keywords: Monetary policy; exchange rates; macroeconomic stability; (follow links to similar papers)
JEL-Codes: E52; F31; F41; (follow links to similar papers)
38 pages, August 18, 2002
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