The Insulation Capacity of a Flexible Exchange Rate System in the Context of External Inflation
研究了灵活汇率制度在外部通胀下隔离能力不完全时的后果，发现短期隔离不完整，长期隔离需国内通缩和供给过剩。
Recent experience with more flexible exchange rate regimes has led to scepticism about their capacity to insulate an economy from foreign inflation. The paper is concerned with the consequences of flexible rates when insulation is incomplete. The first model examined involves static expectations which produces zero short run, but complete long run insulation. The second model shows that, even with perfect foresight, insulation will be incomplete in the short run, and foreign inflation may even lead to a short run depreciation of the exchange rate. Without short run insulation, an attempt to achieve long run insulation requires domestic deflation and excess supply.