Fix or Float

Abstract

A fundamental policy decision every government must make is whether, and to what extent, to manage the exchange rate. This note discusses some of the basic costs and benefits of fixed and floating exchange rates. Excerpt UVA-F-1746 Jan. 5, 2015 Fix or Float A fundamental policy decision every government must make is whether, and to what extent, to manage the exchange rate. This note discusses some of the basic costs and benefits of fixed and floating exchange rates. Fixed Exchange Rates: The Pros The benefits of a fixed exchange rate include the following: . . .