Exchange rate and optimal currency area

Author: Mundell
Publisher:
Publish Date: 2003-10-01
Features: As humanity enters the 21st century, the trend of economic globalization has increasingly become a significant factor influencing the world economy and the development of economies in various countries. The macroeconomics of open economies, established by Professor Mundell, has become an important academic work for economists and government managers to study. However, like other creative ideas, the academic significance and value of Mundell's economics are not limited to its explanation of economic phenomena and its historical impact, but rather lie in the new inspiration and methods it provides for successors. The theme of this volume is "Exchange Rates and Optimal Currency Areas," including seven articles. The global macroeconomic policy revolution, the implementation of new exchange rate policies by countries, and the trend of the world economy moving toward large-scale currency zones and monetary unions make the issues examined in this volume increasingly important. The core of the 20th-century macroeconomic policy revolution was the collapse of the international gold standard and the skepticism toward fiscal policies, monetary policies, and exchange rate policies that were once considered correct. Under the gold standard, the "rules of the game" were clear: "Do not play with gold or exchange rates; maintain budget balance; let the balance of payments dominate monetary policy." Any deviation from these policy principles would threaten the survival of the gold standard, leading to economic and financial instability.