Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/22972 
Year of Publication: 
2006
Series/Report no.: 
Bonn Econ Discussion Papers No. 28/2006
Publisher: 
University of Bonn, Bonn Graduate School of Economics (BGSE), Bonn
Abstract: 
Conclusions favorable to flexible exchange rates typically accord with expected utility theory in ignoring the costs that exchange rate uncertainty generates for governments, central banks, firms and unions in: (i) choosing among acts; and (ii) existing until learning the outcome of the chosen act. Allowing for these involves SKAT, the Stages of Knowledge Ahead Theory, Pope (1983, 1995, 2005), Pope, Leitner and Leopold (2006). A laboratory experiment suggests that (i) and (ii) together outweigh the advantages of having a flexible exchange rate as an additional instrument for managing a country?s international competitiveness goal.
Subjects: 
exchange rate regime
exchange rate uncertainties
currency union
macro-economic instruments
experiment
SKAT
JEL: 
F33
D80
D81
F31
Document Type: 
Working Paper

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