SURVEY OF INTERNATIONAL ECONOMICS COURSE

MODULE 14:
FIXED VS. FLOATING EXCHANGE RATES

Textbook Reading:

Chapter 8 - Policy Effects with Floating Exchange Rates
Read Section 8.2 on Indirect and Direct FOREX Interventions.

Chapter 9 - Fixed Exchange Rates
Read Sections 9.3 to 9.6.

Chapter 11 - Fixed vs. Floating Exchange Rates
Read All Sections.

Presentation Slides:

Fixed vs. Floating Exchange Rates Slides

Recent Events/Analysis:

Fixed or Flexible? Getting the Exchange Rate Right in the 1990s
A 1998 article by Francesco Caramazza and Jahangir Aziz from the IMF describing the differences between fixed and floating exchange rates.

OVERVIEW

This session introduces the mechanism needed to maintain a credible fixed exchange rate. It also provides a brief overview of the pros and cons of both fixed and floating exchange rates.

VIDEO LECTURE

This lecture was recorded in Fall 2016. It is 67 minutes long.

ANSWER KEY

Click HERE for answers to the textbook questions.