|
|
|
|
|
|
||
|
|
||||
|
|
||||
|
||||
| ||||||||||||||||||||||||||||||||||||||||||||||||||||
Correspondence: Correspondence may be addressed to Anthony M. Endres, Department of Economics, University of Auckland, Private bag 92019, Auckland, New Zealand; e-mail: a.endres{at}auckland.ac.nz.
The case made for market-determined, flexible exchange rates by Princeton economist Frank D. Graham between the 1920s and the late 1940s is examined. It is argued that Graham's case embodied all essential elements of a monetary approach to exchange rates and the balance of payments. Exchange rates are monetary variables, and monetary policy strongly influences their movement. Contrary to received commentaries, Graham was the first twentieth-century economist to make a coherent case for flexible rates; he was an unappreciated forerunner of postwar, Chicago-based advocacy of flexible rates culminating in Friedman's 1953 classic. Graham's antipathy toward the Bretton Woods plans for exchange rates mirrored that of the Chicagoans. He advanced a liberal policy agenda including flexible exchange rates, capital mobility, rule-based independent monetary policies, and free trade. In the form of Frank Graham, Princeton was not far from Chicago.
Key Words: monetary approach to exchange rates • purchasing power parity • Graham effect • Bretton Woods
Aliber, R. Z. 1987. Exchange Rates. In The New Palgrave: A Dictionary of Economics, edited by J. Eatwell, M. Milgate, and P. Newman, 2: 210-12. London: Macmillan.
Bordo, M. D. 1993. The Bretton Woods International Monetary System: A Historical Overview. In A Retrospective on the Bretton Woods System, edited by M. D. Bordo and B. Eichengreen, 3-89. Chicago: University of Chicago Press.
Bordo, M. D., and H. James. 2002. The Adam Klug Memorial Lecture: Haberler versus Nurkse: The Case for Floating Exchange Rates as an Alternative to Bretton Woods? In The Open Economy Macromodel: Past, Present, and Future, edited by A. Arnon and W. Young, 161-82. Boston: Kluwer Academic Press.
Cooper, R. N. 1999. Exchange Rate Choices. In Rethinking the International Monetary System, edited by J. S. Little and G. P. Olivei, 99-123. Boston: Federal Reserve Bank of Boston.
Dornbusch, R. 1987. Purchasing Power Parity. In The New Palgrave: A Dictionary of Economics, edited by J. Eatwell, M. Milgate, and P. Newman, 3: 1075-85. London: Macmillan.
———. 1988. Exchange Rates and Inflation. Cambridge, Mass.: MIT Press.
Eichengreen, B. 1994. International Monetary Arrangements for the 21st Century. Washington, D.C.: Brookings Institution.
Endres, A. M. 2005. Great Architects of International Finance: The Bretton Woods Era. London: Routledge.
Frenkel, J. A. 1976a. Adjustment Mechanisms and the Monetary Approach to the Balance of Payments: A Doctrinal Perspective. In International Monetary Economics, edited by E. Claassen and P. Salin, 29-48. Amsterdam: North-Holland Publishing.
———. 1976b. A Monetary Approach to the Exchange Rate: Doctrinal Aspects and Empirical Evidence. Scandinavian Journal of Economics 78: 200-224.
———. 1977. The Forward Exchange Rate, Expectations, and the Demand for Money: The German Hyperinflation. American Economic Review 67.4: 653-70.
———. 1978. Purchasing Power Parity. Journal of International Economics 8: 169-91.
Frenkel, J. A., and H. G. Johnson. 1976a. Introductory Essay. In The Monetary Approach to the Balance of Payments, 21-45. London: George Allen & Unwin.
———. 1976b. Preface. In The Monetary Approach to the Balance of Payments, 8-13. London: George Allen & Unwin.
Friedman, M. 1951. Commodity-Reserve Currency. Journal of Political Economy 59: 203-32.
———. 1953a. The Case for Flexible Exchange Rates. In Essays in Positive Economics, 157-203. Chicago: University of Chicago Press.
———. 1953b. Why the Dollar Shortage? Freeman 4.6: 1-5.[Medline]
———. [1948] 1953. A Monetary and Fiscal Framework for Economic Stability. In Essays in Positive Economics, 133-56. Chicago: University of Chicago Press.
———. 1969. Roundtable on Exchange Rate Policy. American Economic Review, Papers and Proceedings 59: 364-66.
Friedman, M., and A. J. Schwartz. 1963. A Monetary History of the United States, 1867–1960. Princeton: Princeton University Press.
Giovannini, A. 1993. Bretton Woods and Its Precursors: Rules versus Discretion in the History of International Monetary Regimes. In A Retrospective on the Bretton Woods System, edited by M. Bordo and B. Eichengreen, 109-47. Chicago: University of Chicago Press.
Graham, F. D. 1922. International Trade under Depreciated Paper: The United States, 1862–79. Quarterly Journal of Economics 36: 220-73.
———. 1925. Review of Canada's Balance of International Indebtedness, 1900–1913, by Jacob Viner. American Economic Review 15: 106-9.
———. 1929. Self-limiting and Self-inflammatory Movements in Exchange Rates. Quarterly Journal of Economics 43: 221-49.
———. 1930. Exchange, Prices, and Production in Hyperinflation: Germany, 1920–1923. Princeton: Princeton University Press.
———. 1935. Recent Movements in International Price Levels and the Doctrine of Purchasing Power Parity. Journal of the American Statistical Association 30, no. 189 (supplement): 159-66.
———. 1940a. Achilles' Heels in Monetary Standards. American Economic Review 30.1 (part 1): 16-32.
———. 1940b. The Primary Functions of Money and Their Consummation in Monetary Policy. American Economic Review 30.1 (part 2, supplement): 1-16.
———. 1941. Transition to a Commodity Reserve Currency. American Economic Review 31: 520-25.
———. 1942. Social Goals and Economic Institutions. Princeton: Princeton University Press.
———. 1943a. Discussion. American Economic Review 33.1 (part 2): 334-35.
———. 1943b. Fundamentals of International Monetary Policy. Essays in Inter national Finance, no. 2. Princeton: International Finance Section, Princeton University.
———. 1948. The Theory of International Values. Princeton: Princeton University Press.
———. 1949a. The Cause and Cure of "Dollar Shortage." Essays in International Finance, no. 10. Princeton: International Finance Section, Princeton University.
———. 1949b. Review of The West at Bay, by Barbara Ward. American Economic Review 39: 550-53.
———. 1971. Miscellany. Journal of International Economics 1: 249.
Graham, F. D., and C. R. Whittlesey. 1934. Fluctuating Exchange Rates, Foreign Trade, and the Price Level. American Economic Review 24: 401-16.
Haberler, G. 1980. Flexible-Exchange Rate Theory and Controversies Once Again. In Flexible Exchange Rates and the Balance of Payments, edited by J. S. Chipman and C. P. Kindleberger, 29-48. Amsterdam: North-Holland Publishing.
Halm, G .N. 1945. International Monetary Cooperation. Chapel Hill: University of North Carolina Press.
Hayek, F. A. 1943. A Commodity Reserve Currency. Economic Journal 53: 176-84.
———. 1945. Review of Social Goals and Economic Institutions, by Frank Graham. Journal of Political Economy 53: 177-79.
———. [1937] 1999. Monetary Nationalism and International Stability. In The Collected Works of F. A. Hayek, 4: 37-100. Chicago: University of Chicago Press.
Hinshaw, R. 1987. Frank Dunstone Graham. In The New Palgrave: A Dictionary of Economics, edited by J. Eatwell, M. Milgate, and P. Newman, 2: 556-57. London: Macmillan.
Humphrey, T. M. 1980. Dennis H. Robertson and the Monetary Approach to Exchange Rates. Federal Reserve Bank of Richmond Economic Review (May–June): 19-26.
Irwin, R. D. 1996. Against the Tide: An Intellectual History of Free Trade. Princeton: Princeton University Press.
Isard, P. 1995. Exchange Rate Economics. Cambridge, U.K.: Cambridge University Press.
Johnson, H. G. [1969] 1972. The Case for Flexible Exchange Rates, 1969. In Further Essays in Monetary Economics, 198-222. London: George Allen & Unwin.
———. 1977. The Monetary Approach to the Balance of Payments: A Nontechnical Guide. Journal of International Economics 7: 251-68.
Keynes, J. M. 1923. A Tract on Monetary Reform. London: Macmillan.
———. 1943a. Letter to Professor F. D. Graham, 31 December. In Activities 1941–1946: Shaping the Post-war World, Bretton Woods, and Reparations, vol. 26 of the Collected Writings of John Maynard Keynes, edited by D. Moggridge, 34-36. London: Macmillan.
———. 1943b. The Objective of International Price Stability. Economic Journal 53: 185-87.
———. 1944. Note by Lord Keynes. Economic Journal 54: 429-30.
Krueger, A. O. 1998. Whither the IMF and the World Bank? Journal of Economic Literature 36: 1983-2020.
Lutz, F. A. 1954. The Case for Flexible Exchange Rates. Banca Nazionale del Lavoro Quarterly Review 7: 175-85.
Machlup, F. 1966. International Monetary Economics: Collected Essays. London: Allen and Unwin.
McKenzie, L. W. 1954. On Equilibrium in Graham's Model of World Trade and Other Competitive Systems. Econometrica 22: 147-61.[Medline]
McKinnon, R. I. 1996. The Rules of the Game: International Money and Exchange Rates. Cambridge, Mass.: MIT Press.
Meade, J. E. 1955. The Case for Variable Exchange Rates. Three Banks Review 27: 3-27.
Mints, L. W. 1950. Monetary Policy for a Competitive Society. New York: McGraw-Hill.
Mussa, M. L. 1990. Exchange Rates in Theory and Reality. Essays in International Finance, no. 179. Princeton: International Finance Section, Princeton University.
Myhrman, J. 1976. Experiences of Flexible Exchange Rates in Earlier Periods: Theories, Evidence, and a New View. Scandinavian Journal of Economics 78: 169-96.
Nurkse, R. 1944. International Currency Experience: Lessons of the Interwar Period. Geneva: League of Nations.
Ohlin, B. 1933. Interregional and International Trade. Cambridge, Mass.: Harvard University Press.
Rabin, A. A., and L. B. Yeager. 1982. Monetary Approaches to the Balance of Payments and Exchange Rates. Essays in International Finance, no. 148. Princeton: International Finance Section, Princeton University.
Robertson, D. H. 1922. Money. Cambridge: Cambridge University Press.
Samuelson, P. A. 1971a. An Exact Hume-Ricardo-Marshall Model of International Trade. Journal of International Economics 1: 1-18.
———. 1971b. On the Trail of Conventional Beliefs about the Transfer Problem. In Trade, Balance of Payments, and Growth: Papers in Honor of Charles P. Kindleberger, edited by J. Bhagwati et al., 327-51. Amsterdam: North-Holland/Elsevier Publishing Company.
Simons, H. C. 1936. Rules versus Authorities in Monetary Policy. Journal of Political Economy 54: 1-30.
———. [1943] 1948. Post-War Economic Policy: Some Traditional Liberal Proposals. In Economic Policy for a Free Society, 240-59. Chicago: University of Chicago Press.
———. [1944] 1948. Money, Tariffs, and Peace. In Economic Policy for a Free Society, 260-76. Chicago: University of Chicago Press.
Sohmen, E. 1969. Flexible Exchange Rates. Rev. ed. Chicago: University of Chicago Press.
Taussig, F. W. 1917. International Trade under Depreciated Paper: A Contribution to Theory. Quarterly Journal of Economics 31: 380-403.
Viner, J. 1937. Studies in the Theory of International Trade. London: George Allen & Unwin.
CiteULike 
Connotea 
Del.icio.us 
Digg 
Reddit 
Technorati What's this?
| ||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
