Working Paper: CEPR ID: DP812
Authors: Barry Eichengreen
Abstract: The international monetary system has passed through a succession of phases characterized alternatively by the dominance of fixed and flexible exchange rates. How are these repeated shifts between fixed and flexible rate regimes to be understood? The present paper specifies and tests six hypotheses with the capacity to explain the alternating phases of fixed and flexible exchange rates into which the last century can be partitioned. The evidence provides support for a number of the hypotheses considered. In this sense it confirms that monocausal explanations are unlikely to provide an adequate account of the endogeneity of exchange rate regimes.
Keywords: exchange rates; regimes
JEL Codes: F31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| fixed exchange rates (F31) | international economic leadership (F02) |
| international economic leadership (F02) | internalization of externalities (D62) |
| international cooperation (F53) | maintenance of fixed exchange rates (F33) |
| intellectual consensus (D70) | cooperation among policymakers (F55) |
| macroeconomic stability (E60) | ability to maintain fixed exchange rates (F33) |
| fixed exchange rates (F31) | anti-inflationary commitment (E31) |
| domestic distributional politics (D39) | choice of exchange rate regimes (F33) |