Money and Other Assets in the Adjustment Process under Flexible Exchange Rates

Abstract

The consideration of exchange-rate flexibility (pure or managed) in a context in which money plays an essential role will first be made in the framework of the standard Keynesian-type model described in Sect. 15.4, which, as we know, considers the problem from the point of view of flow disequilibria and their adjustment. In this framework we shall also examine the problem of achieving internal and external equilibrium (i.e., full employment and balance-of-payments equilibrium), and the age-old question of the insulating power of flexible exchange rates and the transmission of perturbations in various exchange-rate regimes.