FLEXIBLE EXCHANGE RATES AND TRADED GOODS PRICES
THE ROLE OF OLIGOPOLY PRICING IN THE CANADIAN EXPERIENCE*
George Washington University
The exchange crises of recent years and the adoption of either temporarily or permanently flexible exchange rates by Canada, the United Kingdom, Germany and the Netherlands have led to a revival of interest in replacing fixed parities with some form of exchange rate flexibility. The prospect of floating exchange rates is usually met, however, with hostility from bankers, government officials, and managers of firms engaged in foreign trade. This reaction is based on the spectre of various instabilities which are expected to result from exchange rate variations, and some attention has ...