Exchange Rate Expectations and the Short‐Run Effectiveness of Monetary Policy

Abstract

This article is concerned with the reconsideration of the proposition that monetary policy is more effective under flexible exchange rates than under fixed, in the light of the low elasticities of imports and exports with respect to the exchange rate that may prevail in the short run. It is shown that when the framework put forward in this context is modified, recent results are not generally supportable.

Citation

O'Connell, J. (1983), "Exchange Rate Expectations and the Short‐Run Effectiveness of Monetary Policy", Journal of Economic Studies, Vol. 10 No. 2, pp. 21-28. https://doi.org/10.1108/eb002554