In theory, floating exchange rates are supposed to give countries more freedom to manage their domestic economies than they had when rates were pegged. Professor Black of Vanderbilt (and currently of the State Department) shows that the degree and kind of freedom in fact varies a good deal and that countries can go wrong under either system. His evidence is a set of concise, realistic studies of Britain, France, Germany, Sweden and the U.S. in 1972-75.
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