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International Economics Commons

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Operations and Supply Chain Management

1981

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Full-Text Articles in International Economics

The Exchange Regime, Resource Allocation, And Uncertainty, Walter Enders, Harvey E. Lapan Apr 1981

The Exchange Regime, Resource Allocation, And Uncertainty, Walter Enders, Harvey E. Lapan

Economic Staff Paper Series

The role of nontraded goods has received considerable attention from economists attempting to assess the relative merits of fixed versus flexible exchange rate regimes. The traditional view is summarized in McKinnon's [10, 719] statement: "...if we move across the spectrum from closed to open economies, flexible exchange rates become both less effective as a control device for external balance and more damaging to internal price stability. Yet, as is widely recognized, the classification of goods into traded or nontraded depends upon the exchange rate. If an economy is not in long—run equilibrium, its position on the spectrum from ...