Description
Abstract: Increased interest has been shown in recent months regarding the feasibility and potential advantages of a common currency for Canada and the United States. This paper explores the arguments for and against such an arrangement and tries to determine whether it would offer any significant advantages for Canada compared with the present flexible exchange rate system. On the basis of the evidence that is presented, the author concludes 1) that most of the criticisms that have been directed at flexible exchange rates are either exaggerated or unsubstantiated, and 2) that a flexible exchange rate continues to be the preferred option for Canada. © 2000 Elsevier Science Inc.