On the indeterminacy of equilibrium exchange rates Public Deposited

Creator Series Issue number
  • 153
Date Created
  • 1980-04
  • In this paper we consider a particular international economic policy regime: the laissez-faire regime, the distinguishing features of which are unrestricted portfolio choice and floating exchange rates. And as we show, that regime, although favored by many economists, is not economically feasible. It does not have a determinate equilibrium. That is an implication of an over-lapping-generations model. But as we argue in the paper, that is no reason for doubting the indeterminacy of the laissez-faire regime equilibrium.

Subject (JEL) Keyword Alternative title
  • Why markets in foreign exchange are different from other markets / Neil Wallace.
  • Samuelson's consumption-loan model with country-specific fiat monies / John Kareken, Neil Wallace.
  • International monetary reform : the feasible alternatives / John Kareken, Neil Wallace.
Contributor Date Modified
  • 08/22/2018
  • Federal Reserve Bank of Minneapolis. Research Division.
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