China is criticised for keeping its dollar exchange rate fairly stable when it has a large trade (saving) surplus. This criticism is misplaced in two ways. First, no predictable link exists between the exchange rate and the trade balance of an international creditor economy. Second, since 1995,...

The international dollar standard is an accident of history that greatly facilitates international trade and exchange. But erratic US monetary and financial policies have upset the American and world economies so as to make foreigners unhappy. A weak and falling dollar led to the great price...

Before the 1997-98 crisis, the East Asian economies - except for Japan - informally pegged their currencies to the dollar. These soft pegs made them vulnerable to a depreciating yen, thereby aggravating the crisis. To limit future misalignments, the IMF wants East Asian currencies to float...

Frontmatter -- Contents -- List of Figures -- List of Tables -- Introduction -- PART I: APPRAISING EXCHANGE-RATE ARRANGEMENTS -- 1. The Endogeneity of Exchange-Rate Regimes -- 2. Exchange-Rate Behavior under Alternative Exchange-Rate Arrangements -- 3. Panel: One Money for How Many? -- PART II:...

Exchange rate flexibility is commonly justified as an efficient method for adjusting the trade balance to some desirable net international capital flow. In this orthodox view, fluctuations in a country's terms of trade or its saving-investment balance would continually upset its balance of...