Currency Fluctuations in the Post-Bretton Woods Era

Bibliographic Data

ID4029665
AuthorsRichard Meese (Associate Professor of Business Administration, University of California, Berkeley, California., corresponding author)
Year1990
Volume4
Issue1
Pages117-134
Publication date1990-02-01
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueThe Journal of Economic Perspectives (JOURNAL)
Journal identifiersISSN: 0895-3309 • E-ISSN: 1944-7965
PublisherAmerican Economic Association (PUBLISHER • US)
DOI10.1257/jep.4.1.117
OpenAlexW2131795468
LanguageEN
Citations received10
References cited16

The international monetary landscape that has emerged since the felling of Bretton Woods is characterized by a hybrid exchange rate system that lies somewhere between the textbook polar cases of a gold standard and a pure float. This system has relatively flexible exchange rates between major countries, active central bank intervention in the market for the major currencies, and predominantly fixed exchange rates (relative to the dollar or to some basket of currencies) for less developed countries and newly industrializing nations. The majority of research on currency markets since the early 1970s has focused on the characteristics of flexible exchange rates under this hybrid regime. My thesis is that this research has been unsuccessful. The proportion of (monthly or quarterly) exchange rate changes that current models can explain is essentially zero. Even after-the-fact forecasts that use actual values (instead of forecasted values) of the explanatory variables cannot explain major currency movements over the post-Bretton Woods era. This result is quite surprising

Currency · Economics · Exchange rate · Foreign exchange market · Foreign exchange risk · International economics · Liberian dollar · Monetary economics · Reserve currency · Special drawing rights · Global Financial Crisis and Policies · Market Dynamics and Volatility · Monetary Policy and Economic Impact

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