Examination of the debate between flexible and fixed exchange rates: The choice of the optimal exchange rate system

AnitaRose Teresa Longobardi, Fordham University

Abstract

This dissertation has examined the choice of the optimal exchange rate system, given a set of conditions which minimizes the variance of output. Given recent attempts at international exchange rate coordination and the ensuing discussion about the best type of exchange rate system, this has been a relevant and pertinent topic. A country supports the system which minimizes the variability of key economic variables (in particular, real output). If the country knows how real output is influenced by exogenous shocks, and to which shocks it is most susceptible, it can support the exchange rate system which insulates output from those disturbances, and thus the country can better attain its goals for domestic output. Research is applied to the Canadian economy from 1963 to 1988.^ The empirical results presented here confirm theoretical ideas about the ability of the exchange rate system to provide insulation. This study contributes to the body of economic literature because it provides empirical support for the choice of the optimal exchange rate system which did not previously exist. ^

Subject Area

Economics|Economic theory

Recommended Citation

Longobardi, AnitaRose Teresa, "Examination of the debate between flexible and fixed exchange rates: The choice of the optimal exchange rate system" (1990). ETD Collection for Fordham University. AAI9020015.
http://fordham.bepress.com/dissertations/AAI9020015

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