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Science 31 July 1987:
Vol. 237. no. 4814, pp. 489 - 493
DOI: 10.1126/science.237.4814.489
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Articles

Search for a New Exchange-Rate Regime

JOHN WILLIAMSON 1

1 Senior fellow at the Institute for International Economics, Washington, DC, 20036.

The regime of unmanaged floating exchange rates was implicitly judged a failure when, with the Plaza Agreement, attempts at cooperative exchange-rate management were reintroduced primarily because of concern at the size of misalignments. Any satisfactory successor regime will need to limit misalignments while retaining the genuine social benefits of exchange-rate flexibility. It is argued that a system of target zones for exchange rates, ideally embedded in a more comprehensive set of guidelines for international economic policy coordination, could best reconcile these needs.

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Science. ISSN 0036-8075 (print), 1095-9203 (online)