Crawling peg

Abstract

A ‘crawling peg’ denotes an exchange rate system in which the value of a country’s currency is fixed but moveable. The country would undertake to keep its currency at a fixed, or ‘par’ value. But that par value itself would be gradually changed, if this were necessary to correct a ‘fundamental disequilibrium’ in the country’s balance of payments. As elaborated by Williamson (1965) the rate of gradual adjustment would be limited to a maximum rate of one twenty-sixth of one per cent per week. Such a proposal had earlier been put forward by Meade (1964), and the idea originally came from Harrod (see Harrod 1969, p. 92).KeywordsExchange RateInterest RateCapital FlowFlexible Exchange RateFloat Exchange RateThese keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.