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dc.contributor.authorBordo, Michaelen_US
dc.contributor.authorGomes, Tamaraen_US
dc.contributor.authorSchembri, Lawrenceen_US
dc.date.accessioned2012-11-28T14:17:29Z-
dc.date.available2012-11-28T14:17:29Z-
dc.date.issued2009en_US
dc.identifier.urihttp://hdl.handle.net/10419/66939-
dc.description.abstractCanada played an important role in the postwar establishment of the International Monetary Fund (IMF), yet it was also the first major member to challenge the orthodoxy of the BrettonWoods par value system by abandoning it in 1950 in favour of a floating, market-determined exchange rate. Although the IMF heavily criticized this decision, Canada's trail-blazing experience demonstrated that a flexible exchange rate could operate in a stable and effective manner under a high degree of capital mobility. Equally important, it showed that monetary policy needs to be conducted differently under a flexible exchange rate and capital mobility. The remarkable stability of the dollar during the 1950s contradicted previous wisdom on floating exchange rates, which had predicted significant volatility. In May of 1962, Canada returned to the BrettonWoods system as a prodigal son after a period of controversial monetary policy and a failed attempt to depreciate the value of the Canadian dollar. The authors critically analyze the interaction between Canadian and IMF officials regarding Canada's exchange rate policy in view of the economic circumstances and the prevailing wisdom at the time. They also examine the impact on IMF research and policy, because the Canadian experience influenced the work of Rudolf Rhomberg as well as Robert Mundell and Marcus Fleming, resulting in the development of the MundellFleming model. Thus, the Canadian experience with a floating exchange rate not only had important implications for the IMF and the BrettonWoods system, but also for macroeconomic theory and policy in open economies.en_US
dc.language.isoengen_US
dc.publisherBank of Canada Ottawaen_US
dc.relation.ispartofseriesBank of Canada Discussion Paper 2009-1en_US
dc.subject.jelF41en_US
dc.subject.jelF55en_US
dc.subject.jelN72en_US
dc.subject.jelE52en_US
dc.subject.jelE58en_US
dc.subject.ddc330en_US
dc.subject.keywordExchange rate regimesen_US
dc.subject.keywordExchange ratesen_US
dc.subject.keywordMonetary policy frameworken_US
dc.subject.stwGeldpolitiken_US
dc.subject.stwWechselkurspolitiken_US
dc.subject.stwFlexibler Wechselkursen_US
dc.subject.stwKapitalmobilit├Ąten_US
dc.subject.stwKanadaen_US
dc.titleCanada and the IMF: Trailblazer or prodigal son?en_US
dc.typeWorking Paperen_US
dc.identifier.ppn58916015Xen_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen_US
Appears in Collections:Bank of Canada Discussion Papers

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