Do Fixed or flexible Exchange rates provide for greater "discipline" on the part of policymakers?(4)

On the other hand ,if a country has a Bop surplus,there is upward pressure on the price level because of the expanding money supply .while this could potentially be helpful from the standpoint of employment and growth,it will aggravate internal performance with respect to the goal of price stability.for example ,Germany has often had a Bop surplus but at the same time did not want its inflation rate to rise .thus,whether a country is in Bop deficit or surplus,the attainment of some internal goal will be frustrated because of the fixed rate system. the resolution of the question of whether discipline and hence price stability is more prevalent with fixed rates than with flexible rates requires extensive empirical research .it can be noted that world inflation was more rapid in the floating-rate period of the 1970s than in the pegged rate period of the 1960s,but events occurring independently of the exchange rate system-such as the behavior of OPEC-undoubtedly played a role in generating this difference in world inflation .