Student Faculty Macro Lunch: "Harry Johnson's 'Case for Flexible Exchange Rates' -- Fifty Years Later"

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Submitted by Brandon Eltiste on January 29, 2021
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Online
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Tuesday, March 2, 2021 - 12:00
About this Event

Maury Obstfeld, UC Berkeley, Economics Department

Fifty years ago, Harry G. Johnson published “The Case for Flexible Exchange Rates, 1969”, its title echoing Milton Friedman's classic essay of the early 1950s. Though some-what overlooked today, Johnson's reprise was an important element in the late 1960s debate over the future of the in-ternational monetary system. The present paper has three objectives. The first is to lay out the historical context in which Johnson's “Case” was written and read. The second is to examine Johnson's main points and see how they stand up to nearly five decades of experience with floating exchange rates since the end of the Bretton Woods system. The third is to review the most recent academic critiques of exchange-rate flexibility and ask how fatal they are to Johnson's basic argument. I conclude that the essential case for exchange-rate flexibility still stands strong.