Journal of Economic Perspectives: Vol. 4 No. 1 (Winter 1990)


Quick Tools:

Print Article Summary
Export Citation
Sign up for Email Alerts Follow us on Twitter


JEP - All Issues

Currency Fluctuations in the Post-Bretton Woods Era

Article Citation

Meese, Richard. 1990. "Currency Fluctuations in the Post-Bretton Woods Era." Journal of Economic Perspectives, 4(1): 117-134.

DOI: 10.1257/jep.4.1.117


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)

JEL Classifications

431: Exchange Rates and Markets--Theory and Studies


View Comments on This Article (0) | Login to post a comment

Journal of Economic Perspectives

Quick Tools:

Sign up for Email Alerts

Follow us on Twitter

Subscription Information
(Institutional Administrator Access)


JEP - All Issues

Virtual Field Journals

AEA Member Login:

AEAweb | AEA Journals | Contact Us