Some doubts about the efficacy of monetary policy under flexible exchange rates |
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Authors: | Jürg Niehans |
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Institution: | Johns Hopkins University, Baltimore, Md. 21218, U.S.A. |
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Abstract: | This paper raises doubts about the proposition that monetary policy is effective, under flexible exchange rates, in stabilizing domestic output. It is argued that if the price elasticities of the demands for exports and imports are affected by the transition to flexible rates, and capital flows are assumed to be dependent on the exchange rate, the efficacy of monetary policy under flexible rates will not necessarily follow. |
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