of noise traders alters the composition of the market and generates excess exchange rate volatility, since noise traders … both create and share the risk associated with exchange rate volatility. In such circumstances, monetary policy can be used … to lower exchange rate volatility without altering macroeconomic fundamentals. …

Fixed exchange rates are less volatile than floating rates. The volatility of macroeconomic variables, such as money …-off between reduced exchange rate volatility and macroeconomic stability. …