The article explores how different exchange rate systems affect a country's economic stability. By studying Sweden's hypothetical scenarios from 1974-1994, the researchers found that a floating exchange rate regime could stabilize the economy but wouldn't reduce volatility compared to a fixed regime. They also compared different monetary policies and found that price level targeting is more effective in reducing variability. Additionally, the study shows that countries with high productivity or trade deficits tend to have stronger currencies, influenced by non-traded goods prices. Denmark and Norway's real exchange rates are mainly affected by terms of trade shocks, while Finland and Sweden are more influenced by demand shocks.