Should We Return to Fixed Exchange Rates?

There has been growing dissatisfaction with the current system of managed floating exchange rates, leading a small but increasing number of economists, policymakers, and journalists to call for a return to a system of limited exchange-rate flexibility. One group advocates a return to the gold standard. At the 1984 Republican National Convention, for example, several members of the platform committee favored a return to the gold standard as a vehicle to sustain domestic price stability and to restore international monetary soundness. Others have harbored the view of returning to a system of more stable exchange rates similar to the Bretton Woods system, with an important role ascribed to the dollar.