The Rôle of the International Monetary Fund in Promoting Price Stability

Abstract

Inflation is primarily a matter of national policy. And in a closed economy the International Monetary Fund would have no role to play. But, as we all know, national economies are linked to one another by their exchange rates and by the complex of international transactions in goods, services, transfers and financial claims which are carried on at those rates of exchange. Since national economies are bound together in this way, they must broadly keep abreast of each other in their price experience. Or rather they would have to do so were it not for such impediments to international competition as quotas, tariffs and exchange restrictions; and also were it not for the fact that exchange rates can themselves be altered to compensate for differential rates of inflation.

The views expressed in this paper by Mr. Gardner are entirely his own and have not been passed upon in any way by the Executive Board of the Fund.