North American Journal of Economics and Finance
3. Dec, 2000

Fix or flex? Alternative exchange rate regimes in an era of global capital mobility

This paper discusses the pros and cons of fixed versus flexible exchange rate regimes under perfect capital mobility from a European perspective. Special attention is given to the exchange rate policy problems of Iceland and Norway and to the linkages between their dependence on natural resources and their choice of exchange rate regime. The relevance of the advent of a common currency in Europe for the Western Hemisphere is also discussed.