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Florence Nightingales Environmental Model
Florence Nightingale’s Environmental Model
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Florence Nightingale’s Environmental Model
Introduction
Florence Nightingale, also known as “The lady with the Lamp” is considered by many to be the founder of scientific nursing and a leading luminary in nursing education. She was the first person to declare that nursing ought to be practiced in a specific way and that it could be achieved through specialised education and training (Meleis, 2011). Her nursing notes formed a strong basis for numerous nursing practices and research in the nursing field. She is the first nursing theorist, who came up with the environmental theory which she explained in her book Notes on Nursing: What it is, What it is not. Her environmental theory is the main subject of discussion of this paper.
The Main Idea of the Theory
Florence Nightingale’s Environmental theory has many ideas and assumptions under which it operates. The basic assumptions embraced by the theory are natural law, nursing as a calling; nursing as an art and a science, humans’ ability to achieve perfection, nursing through altering the environment, nursing that requires a specialised education base and the idea that nursing is totally different and independent of medicine (Selanders, 2010). In her theory, Nightingale depended on several cannons that are now known as the theory’s major concepts.
The concepts of Nightingale’s nursing care include light and noise, ventilation and warming, personal hygiene, quality food consumption, bed and bedding, observation/petty management and sharing hopes and advances. Her document espoused her nursing meta paradigm that forms a nursing conceptual model of Nightingale’s theory (Selanders, 2010). The key paradigms are nursing, person, health and environment. Nightingale’s concepts have unique relationships and thus affect each other. Their relationship is symbiotic in nature since they support and complement each other in practice. Failure to exercise one concept appropriately may negatively affect the outcomes of those concepts that are properly exercised.
Origin of Nightingale’s Theory
Nightingale’s intellectual abilities and her experience certainly led her to develop this theory. She was a statistician and philosopher. She had read a wide variety of literature that influenced her thinking. Finally, being religious lead to a strong conviction in what she termed as “God’s Calling.”
The insistence on a clean environment was a product of her experience in nursing. Her consideration of clean air in relationship to the environment was linked to the air condition to England’s 1800’s atmosphere that was polluted by smoke from coal heating, which affected both indoor and outdoor air quality (Meleis, 2011). Due to her appreciation of sanitation, she also recognised the importance of clean water. During the Crimean war, she noted that the hospitals were infested with rats and fleas. In addition, the wards were continuously flooded by sewerage waters. She also noticed that patients died of diseases rather than wounds. An improvement of their environmental sanitation reduced their mortality rates.
In developing her theory, she used the empirical evidence such as the polar diagram, which is a statistical diagram. She had excellent research skills that enabled her to record what she observed, conceptualise it, infer a synthesised meaning and communicate her findings. In this regard, she developed her theory using empirical information and studies which provided adequate evidence for her to draw the conclusions towards various environmental concepts and assumptions.
Usefulness of Florence Nightingale’s Environmental Model
Nightingale’s theory is very useful for nursing. It has been practical and helpful throughout the 20th century and even now, in the 21st century. The theory further contributes to the understanding and prediction of outcomes in a nursing environment, for instance; it has been effectively used in the management of Tinea Pedis in populations deemed vulnerable (Howett, Connor, & Downes, 2010). Nurses apply this theory by providing patients with the best conditions possible to aid in their recovery. For example, nurses assume the responsibility of reducing noise, alleviating patients’ anxieties as well as providing them with a healthy sleep. Environmental adaptation forms the core of holistic nursing care.
Testability
Nightingale’s Environmental Model has been applied and tested in various environments through scientific research. The tests have shown remarkable evidence of the ability to improve patients’ health by improving their environment. Researchers have proved that unhygienic practices, poor housing conditions, lack of clean drinking water expose children to a number of ailments. Cleaning the environment reduces their symptoms. One of studies that has used this theory is “Environmental Theory Applied to the Home Environment of Children Exposed to HIV at Birth: A Descriptive Research” by Crisitna & Gimeniz (2011). The study exalted the significance of Nightingale’s theory major concepts such as cleanliness, fresh air and sunlight to human health.
Overall Evaluation
Nightingale’s Environmental Model is comprehensive and specific. The theory effectively covers different component of the environment that affect patients’ health. It then narrows down to the specific components of the environment that influence patients’ health and how. To a certain extent, the theory is general since the environment is wide and its impacts are continuously revealed.
Strengths and Weaknesses of the Theory
Strengths
Florence Nightingale’s theories were written in a capturing, logical and flowing format. Her writing is considered elegant.
The theory has a broad spectrum of applications, and it has been used in homes, employment places, intensive care units among others.
It raises consciousness of a nurse on the importance of the environment to healthcare outcomes.
Weaknesses
The theory has limited information about psychosocial environment. It concentrates mainly on the physical environment.
There are still contradictions over the applicability of her concepts.
Conclusion
Nightingale’s Environmental Model is a functional model that has helped to improve the ability of nurses to deliver nursing service to patients. The model has been adopted in hospitals, elderly homes, homes, workplace among others. It has generated positive outcomes in places where it has been adopted.
References
Vieira, C. I., & Gimeniz, G. (2011). Environmental theory applied to the home environment of children exposed to HIV at birth: a descriptive research. Brazilian Journal of Nursing, 10(2), 1.
Howett, M., Connor, A., & Downes, E. (2010). Nightingale theory and intentional comfort touch in management of tinea pedis in vulnerable populations. Journal of Holistic Nursing, 28(4), 244-50
Meleis, A. I. (2011). Theoretical nursing: Development and progress. Philadelphia: Wolters Kluwer Health/Lippincott Williams & Wilkins.
Selanders, L, C. (2010). The power of environmental adaptation: Florence Nightingale’s original theory for nursing practice. Journal of Holistic Nursing, 28(1), 81-8.
Florence Nightingale and her contribution to modern medicine
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Florence Nightingale and her contribution to modern medicine
Despite her death over a century ago, Florence Nightingale’s influence still reverberates in the world of medicine. However, not many are aware that it is because of her that hospice care is wholesome. From proper care of injuries to the sterile conditions of carrying out medical activities in both outpatient and inpatient setting, all nursing aspects can be attributed to her. She argued that separate training should be performed by aspiring nurses (Christopher and Gill, 2005). It was during Florence’s voluntary mission work at the military fields that she got shocked at the number of soldiers dying from infection related deaths. She took it upon herself to ensure the sanitary conditions of health care facilities were up to par, she extended these conditions to housing and cooking segments. She even became immortalized in the poem “Charge of the Light Brigade” due to her hard work (Christopher and Gill, 2005). Florence used her fame to spread her sanitary reforms.
Initially, nursing schools were premised on religion or military orders, nurses were never trained on the arty of caring, they just handled medical emergency situations as they appeared. Florence remedied the situation by initiating the first sectarian school of nursing (Richards, 2006). The institution was supported with funds from British soldiers she assisted during the war. In her nursing classes, Nightingale encouraged her students to focus on the duties and tasks undertaken by nurses, as well as, the entire well-being of their patients. The books she wrote are used today as relevant nursing textbooks. Florence has been called a visionary for her contributions to the field of nursing (Richards, 2006). She shifted the paradigm from the patient to the nursing environment; her points of concern were pure light, pure water, efficient drainage, light and cleanliness.
The nursing profession was looked down upon by many people. However, when Florence realized that many of the British soldiers were not dying from the extent of their injuries but from the pitiable sanitary conditions in which they were being treated. It was from this front that Florence agitated for change in the military health care system, and the nursing profession began gaining respect (Christopher and Gill, 2005). The unsanitary conditions led Florence to formulate statistical analysis on preventable deaths in the military. She came up with the ‘polar-area diagram’ that illustrated the extent of needless deaths occasioned by unsanitary conditions (Julia, 2008). She used this as a basis for the need of reform. She formulated that it was possible to determine social phenomena and subject the results to mathematical analysis. She relied on this formula to develop descriptive statistics that buttressed her claim for the need of reform.
The fact that nursing and health care was reformed by a woman who came from a crop of Victorian women who did not attend universities, neither did they purse profession careers. However, her parents were of a different school of thought, they believed that their children should get an education and make a better life for themselves. She and her sister learned Latin, Italian, mathematics and history (Gillian, 2004). This background enabled Florence to easily gather and formulate data on statistical analysis.
During the Crimean war, in Scutari, an era that had witnessed the shunning of female nurses owing to their poor reputation, the medical situation was appalling and there was public uproar on the neglect of the injured soldiers because of insufficient medical attention and treatment in unsanitary and inhumane conditions. Soldiers lay on their own excrement on feeble stretchers strewn on corridors (Julia, 2008). The health facilities were infested with bugs and rodents; there were no bandages and soap. Florence and her nurses tidied up the place, cared for patients by day, and through the night using a lamp. Through her actions of caring for her patients throughout the night, she was referred to as ‘lady of the lamp.’
Florence gathered data and revolutionaries recordkeeping practices. She applied the data in improving the military and city hospitals. Florence and a team of nurses worked hard to overturn the conditions at Scutari to the point of reducing the overall deaths by twothirds. She conducted analyses on mortality rate, which she used to support her notion that improving sanitary conditions would result in a decrease, in deaths (Gillian, 2004). After her suggestions were implemented, the mortality rate reduced drastically.
From those results, she graphically represented the data, created polar-area charts that indicated the statistic being highlighted is proportional to the region of the wedge in a circular representation. Throughout her life, Florence received awards and prize money from various channels, including the British government (Richards, 2006). She used the monies acquired to further her cause of reform in health care. She funded the founding of St. Thomas hospital in which she advanced training and education of nurses.
Florence has been credited for improving conditions in the stay of hospitals. She implemented numerous patient services which aided in the improving of quality treatment in hospitals. It was Florence who came up with a patients’ kitchen where appealing food, in line with medical dietary requirements, was prepared (Mark, 2008). She initiated laundry segments in hospitals so that patients’ apparel would be cleaned and sterilized. In furtherance of making hospital stay more appealing, Florence integrated classrooms, as well as a library, for patients to stimulate their intellect. All the above attributes can be seen in virtually all health care facilities across the world. Florence Nightingale changed the hospital setting and treatment quality; as a result, unnecessary deaths were eradicated.
Nightingale’s statistics and ability to formulate diagrams on the situation on the ground paved the way for organized learning and led to improvement in medical, as well as surgical practices. Florence formulated a Model Hospital Statistical Form for health care facilities to generate and gather regular data and statistics (Linda, 2006). Nursing is not the same as medicine as its goal is to place the patient in conditions that will make them heal and feel better quickly. Nursing exercises promote health regardless in care giving situations.
Today, the nursing and medical fields are still applying practices pioneered by Florence. She emphasized on improved sanitation, gathering and compiling data on the situation on the ground. Hospitals across the world rely on collection of data to inform their decisions, surgeries cannot be conducted without analyzing success rates on similar surgeries, and nurses not only care about the treatment, but the overall well-being of the patient, as well (Mark, 2008). So many exercises revolve around Florence’s contributions and suggestions. Training of nurses has been intensified, and the scope of its study has similarly been increased (Gillian, 2004). From humble beginnings, Florence school of nursing has grown to the level it is today. Health care, as we know it, has developed at an amazing rate, many of the changed being witnessed stem from the ideologies postulated by Florence Nightingale.
References
Gill, Christopher J., and Gill, G.C. Nightingale in Scutari: Her Legacy Reexamined. Clinical Infectious Diseases. 2005. Print.
Gill, Gillian. Nightingales: The Extraordinary Upbringing and Curious Life of Miss Florence Nightingale. Ballantine Books. 2004. Print.
Julia, Rehmeyer. HYPERLINK “http://www.sciencenews.org/index/generic/activity/view/id/38937/title/Florence_Nightingale_The_passionate_statistician” Florence Nightingale: The Passionate Statistician. HYPERLINK “http://en.wikipedia.org/wiki/Science_News” o “Science News”Science News. 2008. Print.
HYPERLINK “http://en.wikipedia.org/wiki/Linda_Richards” o “Linda Richards”Richards, Linda. America’s First Trained Nurse: My Life as a Nurse in America, Great Britain and Japan 1872-1911. Diggory Press. 2006. Print.
Bostridge, Mark. Florence Nightingale, the Woman and her Legend. Viking. 2008. Print.
Floating Exchange Rates applications, significance and impact on economic growth
Floating Exchange Rates’ applications, significance and impact on economic growth
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Introduction
Financial stability and currency values are very important issues that need to be given special attention and recognition by every country in the process of developing, coordinating and implementing macroeconomic policies. By coming up with sound and accountability oriented policies with respect to fiscal and monetary management, the governments become a very important institution as far as issues relating to international finance and international trade are concerned. It is with this respect that the floating interest rate regime has been applied to help in the management, control and regulation of international finance and national currencies. Floating /flexible exchange rate regime entails a macroeconomic money regulation system where the market forces dictate the rates or currency prices. Thus, the rate at which one currency may be sold or traded against another is not rigidly / subjectively determined by the regulators but the interaction between the demand and supply in the foreign exchange market. As such there is neither a static nor predetermined currency exchange rates. This paper discusses the concept of flexible exchange regime as applied by different countries to ensure non discretionary and subjectively determined exchange rates. There is also critical review of the impact that the flexible exchange has in an economy more so with respect to economic growth and enhancement of development and net exports. The paper also outlines the challenges that are faced in the process of application of flexible exchange rates regime in a bid to implement macro economic policies.
Floating Exchange Rates: Description
Descriptively, the flexible exchange rate regime allows for free fluctuation of the exchange rate without interference by the authorities such that the government does neither have an exchange rate control policy nor impose a predetermined exchange rate.
Wide application of the floating exchange rate in the economy can be traced to the 1970s. By 1980s, most countries had adopted this system as the best way to deal with macro-economic challenges that require a more proactive and indirect intervention by the regulators and a way of managing / controlling the speculative exposures that an economy may experience under the fixed exchange rate regime. A major shift in the exchange rate system that led to wide application of the flexible exchange rate came in 1990s when it became apparent that a country had to choose one of the regimes (Kenen, 2000).
Debate among the proponents and opponents of the system of currency rate management have always revolved around the dangers and benefits of the free fluctuations of the exchange rates in the economy. Though the flexible exchange rate regime allows for free movements of the currency prices, the opponents of the system have cited this as a weakness that is akin to economic instability as well as exposures to dangers of economic fluctuations. However, the principle behind the adoption of the flexible exchange has it that the economic fluctuations or changes in the rates of exchange will not be erratic. The significant benefit of this regime is that it enhances national autonomy with respect to monetary issues. As such every country can effectively design the policy instruments that are consistent with their macro economic objectives.
Impact on the Economy
A fundamental question with regards to the role and choice of the type of the regime to adopt would normally be based on the understanding of how the choice made would affect the domestic economy’s growth and development. The flexible exchange rate regime is preferred because of the impact that it has to the economy and influence on the economic growth. Generally, the flexible exchange rate regime has both direct and indirect impacts on an economy. First, under the direct effect, it is held that the flexible exchange rate regime helps an en economy to recover from shocks. Generally, this type of regime has better economic shock insulation as compared to the fixed regime. This argument is supported by Broad (2002) who observed that under the fixed exchange rate regime, due to unfavorable trade balance, a country would experience a huge fall in real GDP figures due to small magnitude currency depreciation as well as fall in price levels . On the other hand, adoption of floating exchange rate regime, experience a relatively smaller magnitude of real GDP fall and high level of currency depreciation, under similar circumstances. However, this argument holds in the short run as in the long run, both regimes show similar behaviors.
By making implementing macroeconomic polices that are well fused with the macro economic objectives and the flexible exchange rate; it is possible to have direct impact on the economy through growth. This system offers the best adjustment to the economic shocks as it is more responsive and fast reflected in the foreign exchange market. This argument is based on the fact that the other sectors that may help in stabilizations such as the labor market do not respond fast to market changes as the foreign exchange currency rates. Similarly, the Treasury (2010) argues that the flexible exchange rate system has been preferred by several countries as it has been viewed to offer “better able to absorb shocks from open capital markets than economies with a pegged rate”. Through the possibility of independence in designing and application of monetary policies, it is likely that the nominal market rigidities can be dealt with effectively.
Based on economic theory, the floating exchange rate regime has some indirect influence on the rate and pace at which an economy grows. The ways in which the flexible exchange rate regime may influence the rate of economic growth is through impacts of investment levels, the composition and nature of the international trade and the pace and well as efficacy of the financial market. Generally, the flexible exchange rate regime has an indirect impact on economic growth. This is mainly in terms of the investment by the foreigners. Though the fixed exchange regime is desired as it encourages stability and certainty, there are certain arguments which favor flexible exchange rates in relations to international investments. The fixed exchange regime has been cited as a god foreign investment attraction model as it keep both the rates of interest and inflationary pressures low. This would encourage borrowing and consumption as well as exports. However, flexible exchange regime has been described as favorable to foreign investors who are risk takers and ready to invest in a foreign market based on possibility of non erratic exchange rates. The flexible exchange rate regime is favored in this respect as the fixed exchange may be abused, or used selectively to perpetuate protectionist policies. This way, the flexible exchange rate regime is depicted as a macro economic policy that encourages globalization and foreign investments on the account that the system is not open to political abuse or arbitrary determination of exchange rates, but it is the market forces that reflect the prices of currencies.
The flexible exchange rate regime also promotes economic growth and development in an indirect manner through enhancement of development of the capital money markets. With a poorly developed financial market, it is not possible for an economy to recover fast from economic shock. However, adoption of flexible exchange rate regime will promote need for competitiveness in the financial markets so as to attract foreign investors in a country’s bourse. This is because, for a floating exchange rate to work effectively, there s need for high level of transparency and objectively strong regulation of the financial market. The transparency in the management of the exchange rate would have a trickle down effect on other sectors, notably the financial market. As such, a country’s competitiveness will improve as indicated by the level of capital inflows and foreigner’s investment in financial securities due to high level of investor confidence.
Influence to Economy
The significance of the type of exchange rate regime chosen by a country may have to an economy has been a point of debate among many researchers. According to Pedreski (2009), taken nominally, an exchange rate has no major influence on economic growth, particularly in the long run. At the same time the author argues that this question has been ambiguously handled with little clear theoretical evidence offered. However, the type of an exchange rate regime chosen, that is flexible or fixed, will affect the economic growth. Impliedly, a floating exchange rate regime may affect the economy and the rate of economic growth through the impacts it has on “trade, investment and productivity” (Pedreski, 2009).
Because of the reduced level of foreign exchange reserves that the central banks need to keep and allowing of market forces to operate freely in the foreign exchange markets, the flexible exchange regime allows for development of monetary polices that can enhancement of certain macro economic objectives. Generally, adoption of the flexible exchange regime boosts international trade, globalization of the financial system and removes risk exposures that come about from currency speculations. This is what Kenen (2000) refers to as “vulnerability to speculative attacks”. This system also promotes independence of the monetary regulatory authorities in different countries so that the process of monetary control is done objectively and professionally. By adopting the flexible exchange regime, a country stands to benefit from sound monetary management, applications of customized macro economic polices that suit a given domestic economic setting.
Several macro economic objectives can be achieved through the flexible exchange regime without much intervention of the central banks. These objectives are normally aimed at promoting productivity and economic growth. One of the main macro-economic objectives is management of export and import net flows so that a country’s development and competitiveness is not hampered by the exchange rate fluctuations and imbalance in the balance of payment account. Trade deficit is normally a non favorable economic indicator. Under the fixed exchange rate regime, to deal with such deficits, the central banks normally use the foreign reserves. This process is expensive and may not immediately spur economic growth. However, under the flexible exchange regime, it is partially possible to allow the market forces to bridge a trade deficit. This occurs where the monetary policy adopted is to enhance money velocity locally so that demand and productivity increases while at the same time export promotion strategies are in place.
The flexible exchange regime would help to achievement these objectives and ensure stabilization in a disequilibrium state. Because of the trade deficit, the foreign currency price (exchange rate) will be forced down. This will help to make the exports relatively cheap while the imports will be more costly. As the exports become more expensive, the demand will fall while the foreign markets will demand more of the exports to enable a country earn more foreign income. In the process, the fundamental disequilibrium situation will be solved and the surging deficit abridged.
Broadly, the changes in the labor market in terms of demand and supply are affected by the kind of exchange rate regime in place. In turn, the situation in the labor market influences the pace and magnitude of the economic growth. Any sector that operates in the international market will feel the effect of currency fluctuations. Thus, it is critical that the monetary policies adopted seek to ensure high output and stability in the labor market. To understand how the currency exchange rate changes affect the labor market, it is important that the relationship between exchange rate changes and labor market be outlined. With a rise in the exchange rate that makes one currency stronger than the other, it is likely that growth Gross Domestic Product, in real terms, will stagnate. This is because; the appreciation in a local currency will greatly affect exports in a negative way. Consequently, the local producers may react to the fall in demand for the products for export markets by scaling down their operations and carrying out retrenchments.
However, through flexible exchange regime, the regulators may act by promoting availability of credit to the business so that the collapse of strategic industries does not take place. This will make the economy have higher money supply. At the same time, when the exchange rate is strong, it is possible that with the increased money supply, the economic stability and recovery may be possible. According to Markin (2003)., when the central banks increase the real money supply in the economy, the prevailing rate of interest will fall in the domestic market, thus enhancing economic growth The rate of economic growth that comes with such sound macro economic polices under the flexible exchange rate regime emanates from the fact that lower interest rates in the domestic markets lead to increase in the consumptions well as investments locally. Based on this argument, the flexible exchange rate regime allows for economic growth given that with the fall in the price levels in the local market, the wealth created act as inducement for expenditure and investments by the households and the private sector.
Benefits to the Economy
Several factors and economic explanations have been put forward to underscore the b benefits that can accrue in an economy that has adopted and fully implemented the principles of floating exchange rate regime. Through the flexible exchange rate system, it is easier for the regulators to influence money velocity, demand and supply in an easier and freer manner. With a free and less rigid money regulation, the central bank will be able to engineer and stimulate economic growth due to possibility to apply target monetary control principles on specific variables to achieve a given objective that suits a particular economy. Put differently, this macro-economic system enables the central bank to pursue a country specific monetary policy. This however requires a high level of fiscal and monetary discipline and non political interference in the momentary policy development and applications. As such the central bank will be able to check the rates of interest rate changes as well as the inflation levels.
The concept of currency competition supports the benefit of non fixed exchange financial regime. This is because there is no control of the prices in the market. This differs from the rigid system where the central banks act as the only suppliers in the market. As only suppliers, they are able to dictate the prices thus promoting unfair competition.
Application of the floating exchange rate has gained wider application because of the fundamental benefits that comes with the system, based on the economic indicators. The fixed regime had certain issues with regards to economic lags. This is because; it is the economy that responds to the pegged currency prices. On the other hand, the non discretionary monetary system, the currency prices adjust with the volumes and nature of market trade thus giving a picture/ reflection of the status of the economy.
Through the pursuit of independent monetary policies, it is easier for the regulators to influence resources distribution fast and efficiently. The regime is less susceptible to economic shocks thus helping in a more objective distribution of the spill-over of market shocks between local and foreign economies. According to Pedreski (2009), flexible exchange rate regime has an effect open the economic shock adjustments as sound management of the process may help design effective strategies to absorb the shocks.
The application of the flexible exchange rate also limits need to have more reserves which can be used in market stabilization. This is because, the principles of flexible exchange rate regimes do not advocate for keeping of foreign reserves that can be used for market intervention. This makes it easier to fully apply the monetary policies to meet such objectives management of employment and inflation rates. Through the self adjustment mechanism, the central bank will have to concentrate in other macroeconomic objectives as the exchange rate will be ‘self adjusting’.
Additionally, the application of the flexible regime offers the best way to ensure faster adjustments to the prevailing economic situations. The economic adjustments however depend on the currency exchange rate movements. During currency depreciation against a stronger one, for instance, the demand for export improve thus promoting export trade, production and economic growth. However, this can only happen if the net export gains are not eroded by the other cash outflows such as increase in wage rate and rise in export prices. Nevertheless, the research findings by show that if bilateral trade figures are analyzed objectively, then it would be would be realized that net flows drawn from the nations that has adopted the flexible exchange regimes would be relatively high, as compared those which do not have such policies (Brada & Mendez, 1988 ).
Challenges
Though the flexible exchange rate regime has been overly described as the best way to enhance a country’s competitiveness in the global market, certain fundamental challenges have been experienced with its applications. The policy challenges of this regime became more serous during the recent credit crunch. As such there have been calls for more innovative international trade management as well as development of intervention strategies that would help in handling the target variables. The general argument has been that the market is efficient and has self adjusting mechanisms. However, the financial crisis exposed weaknesses of the flexible exchange rate regime more in relations to international trade that is fast becoming very interlinked and responsive globally. The major challenges posed by the flexible exchange rate regime is how a country can deal with the spill over of credit crunch that is taking place in another market with which it trades. Another challenge comes about from the fact that most international trade instruments and transactions are voiced in major currencies like the USD, Euro and Yen. This way, the market failures in US, Europe or Japan will automatically be felt globally. Further, the flexible exchange regime results into such challenges as market uncertainties as well as irregularities in flows of capital into and out of an economy. Further,
Selcuk (2005) argues that with the flexible exchange regime it is very challenging for the authorities do contain market volatility. Countries like Turkey had to resort to auctioning of currencies periodically to manage their market precariousness (Selcuk, 2005).
Conclusion
From the discussion, it is evident that the flexible exchange rate enhances transparency, promotes trade and investments as well as the level of production. However, the focus should be how a country can effectively apply the regime without undue interference by the authorities. To ensure economic stability, it is desirable that the authorities manage the short run effects of the exchange rate movements so as to allow the economy to absorb the shock before their effects escalate. This requires what Selcuk (2005) describes in the case of Turkish economy as “structural reform process and pursues sound fiscal policies that would held bring down public debt as well as debt ratio, without which adverse shock may erode the gains made The governments should also have in place effective macro economic objectives and policies as well as target variable that guide international trade.
References
Brada, J. & Mendez, J (1988). Exchange Rate Risk, Exchange Rate Regime and the Volume of
International TradeWWZ and Helbing & Lichtenhahn Verlag AG.
Broad, C. (2002). Terms of Trade and Exchange Rate Regimes in Developing Countries. Federal
Reserve Bank of New York Staff Report Number 148.
Kenen, P., B. (2000). Fixed Versus Floating Exchange Rates Cato Journal, Vol. 20, No. 1.
Markin, A. (2001). Macroeconomic Policy in an Output-Expenditure Model. IAER Journal, Vol.
7, No. 3.
Pedreski, M. (2009). Exchange-Rate Regime and Economic Growth: A Review of the
Theoretical and Empirical Literature. Staffordshire University. Economics e-Journal, No. 31.
Selcuk, F. (2005). The Policy Challenge with Floating Exchange Rates: Turkey’s Recent
Experience. Open Economies Review.
Treasury (2010). Fixed vs. Flexible Exchange Rates. Retrieved June 18, 2010, from
HYPERLINK “http://www.ustreas.gov/offices/international-affairs/economic-exchange-” http://www.ustreas.gov/offices/international-affairs/economic-exchange-rates/pdf/Appendix_2.pdf.