ECN 450 Topic 8 Discussions GCU

Explain why some developing countries have a “fear of floating” and opt instead for a fixed exchange rate regime. What are the risks inherent in this decision?

Describe one weakness and one strength of the gold standard. Do you agree with Milton Friedman that any system of pegged exchange rates is not a satisfactory system for countries with independent political systems; or do you agree with Ronald McKinnon when he says that the choice of exchange rate regime in a highly integrated global economy cannot be made by individual countries? Explain.