This paper examines the effects of ex-change-rate policies when individuals maximize lifetime utility on the basis of rational expectations about the future. The economy studied is one in which the authorities allow free mobility of capital under a crawling-peg exchange-rate regime. Many...

Fifty years ago, Harry G. Johnson published “The Case for Flexible Exchange Rates, 1969”, its title echoing Milton Friedman's classic essay of the early 1950s. Though somewhat overlooked today, Johnson's reprise was an important element in the late 1960s debate over the future of the...