Journal of Economic Perspectives: Vol. 4 No. 1 (Winter 1990)
Print Article Summary Export Citation
Sign up for Email Alerts Follow us on Twitter
Currency Fluctuations in the Post-Bretton Woods Era
Meese, Richard. 1990. "Currency Fluctuations in the Post-Bretton Woods Era." Journal of Economic Perspectives, 4(1): 117-134.
The international monetary landscape that has emerged since the felling of Bretton Woods is characterized by a hybrid exchange rate system that lies somewhere between the textbook polar cases of a gold standard and a pure float. This system has relatively flexible exchange rates between major countries, active central bank intervention in the market for the major currencies, and predominantly fixed exchange rates (relative to the dollar or to some basket of currencies) for less developed countries and newly industrializing nations. The majority of research on currency markets since the early 1970s has focused on the characteristics of flexible exchange rates under this hybrid regime. My thesis is that this research has been unsuccessful. The proportion of (monthly or quarterly) exchange rate changes that current models can explain is essentially zero. Even after-the-fact forecasts that use actual values (instead of forecasted values) of the explanatory variables cannot explain major currency movements over the post-Bretton Woods era. This result is quite surprising.
Article Full-Text Access
Full-text Article (Complimentary)
Meese, Richard (U CA, Berkeley)
431: Exchange Rates and Markets--Theory and Studies
| Login to post a comment