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| Content Provider | Springer Nature Link |
|---|---|
| Author | Bordo, Michael Gomes, Tamara Schembri, Lawrence |
| Copyright Year | 2009 |
| Abstract | Canada played an important role in the establishment of the IMF, yet in 1950 it was also the first major member to abandon the Bretton Woods par-value system in favour of a flexible exchange rate. Canada’s trail-blazing experience demonstrated that a flexible exchange rate can operate in stable and effective manner under a high degree of capital mobility. Equally important, it showed that monetary policy needs to be conducted differently under a flexible exchange rate and capital mobility. In 1962, Canada returned to the Bretton Woods system as a “prodigal son”, after a period of controversial monetary policy. This paper critically analyzes the interaction between Canadian and IMF officials regarding Canada’s exchange rate policy in view of the economic circumstances and the prevailing wisdom at the time. It also examines the impact on IMF research and policy because the Canadian experience influenced the work of Robert Mundell and Marcus Fleming, resulting in the development of the Mundell-Fleming model. Thus, the Canadian floating rate experience not only had important implications for the IMF and the Bretton Woods system, but also for macroeconomic theory and policy in open economies. |
| Starting Page | 309 |
| Ending Page | 333 |
| Page Count | 25 |
| File Format | |
| ISSN | 09237992 |
| Journal | Open Economies Review |
| Volume Number | 21 |
| Issue Number | 2 |
| e-ISSN | 1573708X |
| Language | English |
| Publisher | Springer US |
| Publisher Date | 2009-10-17 |
| Publisher Place | Boston |
| Access Restriction | One Nation One Subscription (ONOS) |
| Subject Keyword | IMF Monetary policy Capital mobility Exchange rate policy Mundell-Fleming model Development Economics International Economics |
| Content Type | Text |
| Resource Type | Article |
| Subject | Economics and Econometrics |
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