TY - JOUR
T1 - On the indeterminacy of equilibrium exchange rates
AU - Kareken, John
AU - Wallace, Neil
N1 - Funding Information:
apolis and to the National Science Foundation under grant SOC 77-22743 to the University of Minnesota. The views expressed do not necessarily represent those of the Federal Reserve Bank of Minneapolis or the Federal Reserve System. This paper is a shortened version of Kareken and Wallace [1978a]. Less formal presentations of the main idea appear in Kareken and Wallace [1978b), Boyer [1978], and Wallace [1979).
Copyright:
Copyright 2016 Elsevier B.V., All rights reserved.
PY - 1981/5
Y1 - 1981/5
N2 - 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, this regime, although favored by many economists, is not economically feasible. It does not have a determinate equilibrium. That is an implication of an overlapping-generations model. More basically, it is an implication of the notion that money is wanted only in order to accomplish trades.
AB - 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, this regime, although favored by many economists, is not economically feasible. It does not have a determinate equilibrium. That is an implication of an overlapping-generations model. More basically, it is an implication of the notion that money is wanted only in order to accomplish trades.
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U2 - 10.2307/1882388
DO - 10.2307/1882388
M3 - Article
AN - SCOPUS:84911693910
SN - 0033-5533
VL - 96
SP - 207
EP - 222
JO - Quarterly Journal of Economics
JF - Quarterly Journal of Economics
IS - 2
ER -