International financial markets' influence on the welfare performance of alternative exchange rate regimes

Arbeitspapier

In this paper Friedmann (1953) and Mundell´s (1968) position favouring flexible over alternative exchange rate regimes is reassessed in the context of international financial market integration. In a new open economy macroeconomic framework the paper shows that financial market integration causes a monetary policy trade-off between stabilising domestic goods prices as opposed to stabilising the terms of trade. Therefore, the welfare ranking of different exchanges rate rules changes during the process of international financial integration. It becomes evident that no single exchange rate regime outperforms in stabilising both domestic consumption and output variability in the process of financial market integration.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Discussion Paper Series 1 ; No. 2008,27

Classification and Topics

• Classification: Wirtschaft ; Open Economy Macroeconomics ; Financial Aspects of Economic Integration ; International Investment; Long-term Capital Movements
• Subject: International Financial Market Integration ; Exchange Rate Rules ; Optimal Monetary Policy ; Welfare ; Internationaler Finanzmarkt ; Marktintegration ; Wechselkurssystem ; Wohlfahrtseffekt ; Neue Makroökonomik offener Volkswirtschaften ; Geldpolitik ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Hoffmann, Mathias
• Event: Veröffentlichung
• (who): Deutsche Bundesbank
• (where): Frankfurt a. M.
• (when): 2008

Further information

• Handle: http://hdl.handle.net/10419/27651
• Last update: 10.03.2025, 11:44 AM CET