Working Paper: NBER ID: w31928
Authors: Sebastian Edwards
Abstract: In this paper I analyze the work on exchange rates and external imbalances by University of Chicago faculty members during the university’s first hundred years, 1892-1992. Many people associate Chicago’s views with Milton Friedman’s advocacy for flexible exchange rates. But, of course, there was much more than that, including the work of J. Laurence Laughlin on bimetallism, Jacob Viner on the balance of payments, Lloyd Metzler on transfers, Harry Johnson on trade and currencies, Lloyd Mints on exchange rate regimes, Robert Mundell on optimal currency areas, and Arnold Harberger on shadow exchange rates, among other. The analysis shows that, although different scholars emphasized different issues, there was a common thread in this research, anchored on the role of relative prices’ changes during the adjustment process.
Keywords: No keywords provided
JEL Codes: B22; E52; E58; F31; F33
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Chicago faculty's emphasis on market signals and relative price adjustments (P19) | understanding of how exchange rates function in relation to external balances (F31) |
| Milton Friedman’s advocacy for flexible exchange rates (F31) | discourse on exchange rates (F31) |
| Jacob Viner's work on purchasing power parity (PPP) critiques (F31) | implications for policy (F68) |