Economics of Financial Crises 10 pages essay

Running head: OUTLINE 1

OUTLINE 5

Exchange rate

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Institution:

Date:

Outline

1. Flexible exchange rate definition

a) The first area of focus will be distinguishing the flexible exchange rate form the international monetary funds.

b) The researcher will also be differentiating the flexible exchange rate form the spectral exchange system which is often conjoined with opponents of rate flexibility.

c) Absence of Balance of payments as a reason for interfering with international trade and payments in light of the autonomy of the domestic market

d) The research will discuss the extent to which the Public is interested in the discussion of flexible exchange rates ("Exchange rate regimes: Flexible exchange rate," n.d.).

2. The researcher will discuss the various arguments for the flexible exchange rates

a) Discussion of the merits of the single currency within a national frontiers are discussed extensively such as

b) Facilitating competition among producers in different areas on the nation

c) Integrating the economy into connected series of markets.

d) Simplifying profit computations among producers (International Monetary Fund. Monetary and Financial Systems Dept., 2017)

e) Integrating the national markets which compose the international market into an international network of connected markets.

3. The fixed rate system definition

Differentiating the fixed rate systems form the flexible exchange rate

Arguments for the fixed rate will be discussed such as

a) Harmonizing the nation’s economic policies in accordance with the international requirement of a single world currency.

b) Surveillance of national economic polices

c) International control of growth (Obstfeld, Ostry, & Qureshi, 2018)

4. Arguments against the fixed monetary rates

Failure to conform to the notion of single currency in various aspects such as

a) Regions of the system’s ability to resist the integrative pressure of the single currency is analyzed

b) In comparison to a national monetary system there is an absence of a centralized institutional arrangement for effective control of the system which is further analyzed.

5. Arguments against the flexible exchange rates

i. A discussion of the flexible exchange rate association with acute monetary disorders (Obstfeld, Ostry, & Qureshi, 2018)

ii. A discussion of the association of flexible rate with disorders of national economic policies.

iii. People overreliance on fixed rate as the natural order of things

6. Instability of the flexible rate

Canadian foreign exchange rate will be the main area of focus

7. Reduction of the international trade ("Exchange rate regimes: Flexible exchange rate," n.d.).

8. Destabilizing speculation

9. Suggestions for greater exchange rate flexibility

a) Proposals for reforming the current international monetary fund

b) Removing political elements in the exchange rate.

c) Wider band proposal and the crawling peg proposal work in practice through empirical studies will be discussed.

d) British economic endeavors to improve their balance of payments will be discussed ("Understanding the History and Disadvantages of a Fixed Exchanged Rate," 2004)

e) Aggregate British demand polies and their attempt to overcome the slow economic growth.

References

Exchange rate regimes: Flexible exchange rate. (n.d.). Retrieved from https://policonomics.com/lp-exchange-rate-regimes-flexible-exchange-rate/

International Monetary Fund. Monetary and Financial Systems Dept. (2017). Global Financial Stability Report, October 2017: Is Growth at Risk? Washington, DC: International Monetary Fund.

Obstfeld, M., Ostry, J. D., & Qureshi, M. S. (2018). Global Financial Cycles and the Exchange Rate Regime: A Perspective from Emerging Markets. DC.

Understanding the History and Disadvantages of a Fixed Exchanged Rate. (2004, December 16). Retrieved from https://www.investopedia.com/terms/f/fixedexchangerate.asp