Exchange Rate Determination and Optimal Economic Policy Under Various Exchange Rate Regimes

1.1 Some characteristics of the floating exchange rate system The flexible exchange rate system has functioned far less satisfactorily than many anticipated in 1973, when the major industrialized countries decided to let their currencies float. The dominant currencies'' exchange rates have fluctuated more 1 than expected. These fluctuations concern both short-term movement- intraday fluctuations a...