Resource title

The damage from clean floats : from an anti-inflationary monetary policy

Resource image

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Resource description

The paper traces the dangers in the closed economy perspective of a monetary policy focused on adomestic inflation goal under a clean float. Field evidence of the damage wrought from this perspective isreinforced by that from a laboratory experiment. The laboratory experiment avoids measurement errors towhich econometric estimation is subject concerning omitted or inadequately proxied determinants, nonnormallydistributed errors, inadequate degrees of freedom, false assumptions of temporal independenceand false synchronicity in decision response lags to stimuli. Our laboratory experiment also embeds a newtheory of exchange rate determination involving the uncontroversial power of fully cooperating centralbanks to totally fix the exchange rate. The new model is within a broader theory that includes risk effectsnormally excluded, SKAT, the Stages of Knowledge Ahead Theory. We use SKAT to analyse outliers inour experimental results, and indicate some new directions and foci for econometric work. Our laboratoryresults point to the superiority of dollarisation, currency unions, a single world money over even dirtyfloats that include the exchange rate as an objective in its own right.

Resource author

Robin Pope, Reinhard Selten, Johannes Kaiser, Sebastian Kube, J├╝rgen von Hagen

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Resource publish date

Resource language

eng

Resource content type

text/html

Resource resource URL

http://hdl.handle.net/10419/27160

Resource license

Adapt according to the presented license agreement and reference the original author.