The exchange rate is sometimes called the most important price in a highly globalized world. A country's choice of its exchange rate regime, between government-managed fixed rates and market-determined floating rates has significant implications for monetary policy, trade, and macroeconomic outcomes, and is the subject of both academic and policy debate. In this book, two leading economists examine the operation and consequences of exchange rate regimes in an era of increasing international interdependence.
Michael Klein and Jay Shambaugh focus on the evolution of exchange rate regimes in the modern era, the period since 1973, which followed the Bretton Woods era of 1945–72 and the pre-World War I gold standard era. The modern era is marked by a wide variety of experiences with exchange rate regimes, both across countries and, for many countries, across time. This provides a rich body of data for studying the economic effects of these exchange rate regimes. Klein and Shambaugh offer a comprehensive, integrated treatment of the characteristics of exchange rate regimes and their effects. The book draws on and synthesizes data from the recent wave of empirical research on this topic, and includes new findings that challenge preconceived notions.
About the Authors
Michael W. Klein is Professor of International Economics at the Fletcher School, Tufts University. He served as Chief Economist in the Office of International Affairs of the U.S. Treasury from 2010 to 2011.
Jay C. Shambaugh is a Visiting Associate Professor at the McDonough School of Business at Georgetown University and was the Senior Economist for International Economics and then Chief Economist at the White House Council of Economic Advisers from 2009 to 2011.
"This important treatise surveys and extends recent research, much of it by the authors, on the dynamics of exchange-rate regimes and the effects of regime choices on economic performance. Anyone wishing to understand the modern international monetary system will profit greatly from reading Klein and Shambaugh's unique synthesis."
Maurice Obstfeld, Department of Economists, University of California, Berkeley
"There are many theories of how economies behave under different exchange-rate regimes. This book provides the factsa comprehensive analysis of macroeconomic performance under various types of exchange-rate regimes. This book will contribute enormously to the policy debate."
Charles Engel, Department of Economics, University of Wisconsin, Madison
"In the aftermath of the global financial crisis, our need for a deeper understanding of the causes and consequences of international monetary and financial arrangements is clearer then ever. Exchange rate regimes in the modern era have shaped trade patterns, capital flows, reserve accumulation, monetary policies, inflation rates, and many other facets of the world economy, including the crisis itself. Klein and Shambaugh masterfully lay out the theories behind these mechanisms and expose their practical import with clear and arresting evidence in a book that is required reading for anyone interested in the global macroeconomic architecture of the twenty-first century."
Alan M. Taylor, Department of Economics, University of California, Davis