The theory of fixed parities and rates

The founders of this theory were J. Robinson, J. Bikerdaik, A. Brown, F. Graham. They proposed a exchange rate regime based on fixed parities, allowing their change only with a fundamental balance of payments. In their research, they used economic and mathematical models, concluding that, that exchange rate changes are a low-efficient means of regulating the balance of payments due to the insufficient reaction of foreign trade to price fluctuations in world markets, depending on exchange rates. This theory influenced principles. The Bretton Woods system, which was based on fixed parities and exchange rates. The forerunners of this theory were the nominee G. Knapp and his followers. They put forward the principle of so-called contractual parity, which is established by the state on the basis of a fixed exchange agreement.