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Discussion Paper Details

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Title: Fixing Exchange Rates: A Virtual Quest for Fundamentals

Author(s): Robert P Flood and Andrew K Rose

Publication Date: September 1993

Keyword(s): Exchange Rates, Fixed, Floating, Monetary, Regime, Structural, Traditional and Volatility

Programme Area(s): International Macroeconomics

Abstract: Fixed exchange rates are less volatile than floating rates. The volatility of macroeconomic variables, such as money and output, does not change very much across exchange rate regimes, however. This suggests that exchange rate models based only on macroeconomic fundamentals are unlikely to be very successful. It also suggests that there is no clear trade-off between reduced exchange rate volatility and macroeconomic stability.

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Bibliographic Reference

Flood, R and Rose, A. 1993. 'Fixing Exchange Rates: A Virtual Quest for Fundamentals'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=838