Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/66939 
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dc.contributor.authorBordo, Michaelen
dc.contributor.authorGomes, Tamaraen
dc.contributor.authorSchembri, Lawrenceen
dc.date.accessioned2012-11-28T14:17:29Z-
dc.date.available2012-11-28T14:17:29Z-
dc.date.issued2009-
dc.identifier.pidoi:10.34989/sdp-2009-1en
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
dc.language.isoengen
dc.publisher|aBank of Canada |cOttawaen
dc.relation.ispartofseries|aBank of Canada Discussion Paper |x2009-1en
dc.subject.jelF41en
dc.subject.jelF55en
dc.subject.jelN72en
dc.subject.jelE52en
dc.subject.jelE58en
dc.subject.ddc330en
dc.subject.keywordExchange rate regimesen
dc.subject.keywordExchange ratesen
dc.subject.keywordMonetary policy frameworken
dc.subject.stwGeldpolitiken
dc.subject.stwWechselkurspolitiken
dc.subject.stwFlexibler Wechselkursen
dc.subject.stwKapitalmobilitäten
dc.subject.stwKanadaen
dc.titleCanada and the IMF: Trailblazer or prodigal son?-
dc.typeWorking Paperen
dc.identifier.ppn58916015Xen
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen
dc.identifier.repecRePEc:bca:bocadp:09-1en

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