Milton Friedman and Exchange Rates in Developing Countries

Abstract

have been extremely useful. The views expressed herein are those of the author and do not necessarily reflect the views of the National Bureau of Economic Research.NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

Milton Friedman: An Early Advocate of Dollarization?

“…As part of an official mission sent by the Eisenhower Administration, in 1955 Friedman traveled to India to advise the government on economic issues (Edwards, 2020). His advice was summarized in a 11-page memo he submitted to the Nehru government in November of that year.…”

“…As Edwards (2020) has pointed out, at this time Friedman had a limited understanding of the currency and monetary issues facing developing countries. His perspective was entirely US centric and rather simplistic.…”

“…He considered Hong Kong and Panama as variants of such a regime. Hanke (2008) and Edwards (2020Edwards ( , 2021 provide an excellent overview of Friedman's position on exchange rates over his long career, particularly for developing countries.…”

Exchange Rate (MIS-) Alignment: An Application of the Behavioural Equilibrium Exchange Rate (beer) Approach to Zimbabwe (1990-2018)

“…For instance, it has been suggested that the current international debt crises were strongly influenced by the improper exchange rate policies implemented around the turn of the millennium (Edwards et al, 2003). According to Edwards (2020), a fixed exchange rate system was a major contributing factor to Chile's currency and financial crises. Undeniably, stability in the RER is a key aspect in improving a country's trade sector, and in enhancing the overall macroeconomic stability and performance of a country (Conrad and Jagessar, 2018;Mahraddika, 2020 andFidora et al, 2021).…”