Robin Pope and Reinhard Selten

Central bank swaps and joint exchange rate interventions rescued global finance in 1982 ? 85, again in 2006-09

Historical, laboratory and theoretical evidence for a single currency

33 pages · 5.91 EUR
(October 2011)

I agree with the terms and conditions, especially point 10 (only private use, no transmission to third party)

From the introduction:

Robin Pope and Reinhard Selten address the problem of exchange rate instability. This chapter's field evidence is: (1) in reality a major exchange rate change devastates an economy, i.e. the widespread academic faith that exchange rate changes are either beneficial or harmless is a false faith that contributes to needless world-wide economic havoc; (2) the 1982 ? 85 exchange rate liquidity crisis sent much of the third world into unmanageable debt levels and was so devastating for the first world that in 1985 the G5 instituted managed cooperating floats; (3) nearly all economists in the official sector and in academia rapidly forgot the devastation and reverted to advocating what caused that devastation, namely a closed economy clean floats exchange rate perspective; and (4) the 2006 ? 2008/9 exchange rate liquidity shock would have been far more drastic without the central bank currency swaps. The field evidence is combined with a laboratory experiment, which allows an interpretation within the Stages of Knowledge Ahead Theory (SKAT). In Pope's and Selten?s view, the joint field plus laboratory evidence indicates that official sectors should maintain an international exchange rate oriented perspective and favours stabilising managed floats, or better a single world currency.