Two Cases for Sand in the Wheels of International Finance

  title={Two Cases for Sand in the Wheels of International Finance},
  author={Barry Eichengreen and James Tobin and Charles Wyplosz},
  journal={The Economic Journal},
The incompatibility of pegged exchange rates, international capital mobility and national monetary autonomy is a basic postulate of open economy macroeconomies. In the present environment of high capital mobility and political uncertainty, even the possibility that governments may utilize their policy autonomy can defeat efforts to peg the exchange rate. This leaves two possibilities. One is to fix the exchange rate irrevocably through monetary unification. The other is to live with floating… 

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