(PDF)” paper presented at the Brookings Panel on Economic Activity, held at the Brookings Institution, Washington, March 20–21; and Robert J. Gordon (2013), “The Phillips Curve Is Alive and Well: Inflation and the NAIRU during the Slow Recovery”, NBER Working Paper Series 19390 (Cambridge, Mass. : National Bureau of Economic Research, August).
Although in principle, it may support faster adjustment of real imbalances, experience has shown that it becomes difficult to control precisely when the challenges are greatest. In times of crisis, the exchange rate tends to respond to financial disturbances rather than to real imbalances and, more often than not, it becomes a constraint on policies rather than a useful adjustment channel.