floating exchange rate

…rates and to a “floating” of most currencies. (See also gold standard; gold-exchange standard.)

The floating exchange-rate system emerged when the old IMF system of pegged exchange rates collapsed. The case for the pegged exchange rate is based partly on the deficiencies of alternative systems. The IMF system of adjustable pegs proved unworkable in a world…

…to study the effect of floating exchange rates (that is, allowing market forces to determine the exchange rate rather than having government try to fix its value in terms of another currency or commodity), Mundell introduced foreign trade and capital movements into earlier closed economy models to show that it…

If a country has a floating exchange rate, it must choose a policy to go with the floating rate. At times in the past, many countries expected their central bank to pursue several different objectives. Eventually, countries recognized that this was an error because it focused the central bank on…

Under floating exchange rates, the adjustment occurs mainly by changing the nominal exchange rate. For example, if Brazil’s monetary policy increases Brazilian inflation, domestic prices of shoes, cocoa, and almost everything else will rise. With a fixed exchange rate, the price rise deters exports and purchases…