Abstract
An exchange rate is a price of one currency in terms of others. The existence of exchange rates derives from the fact that the world is divided into a large number of currency areas, mostly coterminous with nationstates, which trade with one another and therefore exchange currencies at some point (or else confine their trade to barter or ‘counter-trade’). The monetary authorities of a country, which regulate money supply and credit conditions, have by the same token a responsibility for the country’s exchange rate. The precise significance of the exchange rate in relation to economic policy depends on how that responsibility is exercised; in particular on how far the authorities decide to ‘fix’ the rate, i.e. keep its movement within a narrow band of fluctuation (in the limit, zero) over a period of time.
This chapter was originally published in The New Palgrave: A Dictionary of Economics, 1st edition, 1987. Edited by John Eatwell, Murray Milgate and Peter Newman
This is a preview of subscription content, log in via an institution to check access.
Bibliography
Dornbusch, R. 1980. Open economy macro-economics. New York: Basic Books.
Eichengreen, B. (ed.). 1985. The gold standard in theory and history. New York/London: Methuen.
Fleming, J.M. 1962. Domestic financial policies under fixed and under floating exchange rates. IMF Staff Papers 9(November): 369–379.
Gilbert, M. 1968. The gold/dollar system: Conditions of equilibrium and the price of gold, Princeton Essays in International Finance No. 70. Princeton: Princeton University Press.
Gilbert, M. 1980. Quest for world monetary order. New York: Wiley.
McKinnon, R., and W.E. Oates. 1966. The implications of international economic integration for monetary, fiscal and exchange-rate policy, Princeton Studies in International Finance No. 16. Princeton: Princeton University Press.
Meade, J.E. 1951. The theory of international economic policy: vol. I, The balance of payments. London: Oxford University Press.
Mundell, R.A. 1968. International economics. New York: Macmillan.
Triffin, R. 1960. Gold and the dollar crisis. New Haven: Yale University Press.
Triffin, R. 1964. The evolution of the international monetary system: Historical Reappraisal and Future Perspectives, Princeton Studies in International Finance No. 12. Princeton: Princeton University Press.
Author information
Authors and Affiliations
Editor information
Editors and Affiliations
Copyright information
© 1987 The Author(s)
About this entry
Cite this entry
Oppenheimer, P.M. (1987). Fixed Exchange Rates. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95121-5_676-1
Download citation
DOI: https://doi.org/10.1057/978-1-349-95121-5_676-1
Received:
Accepted:
Published:
Publisher Name: Palgrave Macmillan, London
Online ISBN: 978-1-349-95121-5
eBook Packages: Springer Reference Economics and FinanceReference Module Humanities and Social SciencesReference Module Business, Economics and Social Sciences