Floating Exchange Rates in an Interdependent World: No Simple Solutions to the Problems

摘要

This report analyzes the determinants of exchange rates, including the effects of government policies on those rates. The focus was on the yen-dollar exchange rate to examine the issue of Japanese government influence over that rate. The report assesses the current state of knowledge about the factors that contribute to exchange rate determination and describes how the yen-dollar rate responded to these factors during the past 10 years. In evaluating exchange rates in general, the report highlights the constraints that international economic integration impose on economic policy formulation regardless of whether exchange rates are fixed or flexible.