Changes in Exchange Rates as Economic Disturbances
Changes in exchange rates are uncertain events. Most changes in exchange rates are associated with differential movements in national price levels — the price levels in the countries whose currencies are devalued or depreciate have risen more rapidly than the U.S. price level and, to a lesser extent, the countries whose currencies were revalued or appreciated have had less rapid inflation. Even then, the timing of such changes cannot be foretold with accuracy. Moreover, not all changes in exchange rates, especially on a month-to-month or quarter-to-quarter basis, reflect changes in relative prices. Since most industrial countries ceased pegging their currencies in early 1973, the exchange rate between the mark price of the U.S. dollar has fluctuated sharply, even though the U.S. and German price levels have increased at almost the same rate.
KeywordsExchange Rate Monetary Policy Money Supply Foreign Exchange Market International Money
Unable to display preview. Download preview PDF.
- Alan R. Holmes and Francis H. Schott, The New York Foreign Exchange Market (Federal Reserve Bank of New York, 1965 ).Google Scholar
- The evolution of the system is described in many volumes, including Fred Hirsch, Money International ( Harmondsworth: Penguin Books, 1967 ).Google Scholar
- Herbert G. Grubel, The World Monetary System ( Harmondsworth: Penguin Books, 1969 ).Google Scholar
- Robert Z. Aliber, The International Money Game ( London: Macmillan, 1976 ).Google Scholar