Booms, Busts, and Recoveries Message Board

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Strategies & Market Trends : Booms, Busts, and Recoveries

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To: smolejv@gmx.net who wrote (18564)	4/30/2002 9:48:59 AM
From: Ilaine	Read Replies (1) of 74559

Thought you might be interested in this visual explanation I made yesterday for my money and banking class. mason.gmu.edu The concepts are not new. Bob Mundell (Nobel Prize, Economics, 1998) came up with this way of stating things in 1963, in his doctoral dissertation for MIT, but they were known before then. This particular way of stating them has become more popular recently after the US and Europe took such diverging paths after the breakdown of Bretton Woods, especially as monetary authorities in developing countries have had to decide which exchange rate regime to adopt. Europe has a fixed exchange rate within the EU. The dollar floats. Hong Kong and Argentina, among others, tried hard pegs to another currency but we saw what happened to that idea. You know better than I do what Europeans have had to do to achieve convergence. China, apparently, chose the third way, although I don't know how that is faring lately. Edit: whoops, I see a typo under "Free Float." Should be "full autonomy."

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