What Sort of Exchange Rates?

Abstract

No question is so important, so divisive and so perennial as the title of this chapter. Conventional wisdom in different periods has given various answers. The original simple categories supported by the antagonists of ‘fixed’ or ‘floating’ have been expanded by debate, taxonomy and nuance of meaning to a long list of alternative exchange-rate behaviour patterns on a spectrum between the two extremes.¹ The final conclusions of one age are superseded as change occurs in international relations, structures and strengths and makes new judgements necessary. There is no final condition of best balance of advantage.