Abstract
The purpose of this chapter is to raise some questions regarding the impacts of the institutional changes taking place in the Western European economies upon the stability properties of the economies and upon the possibilities for pursuing an active stabilization policy. A crucial question is whether the increased openness will lead to increased instability in the main economic aggregates, and if the policy options to reduce such instability will be severely hampered. I will also discuss whether some types of stabilization, for example, freezing the inter-European exchange rates, may lead to increased instability in other variables. Parts of the paper will be related to the impacts of joining the EC (European Community) monetary arrangements upon the possibilities for pursuing an independent economic policy in countries having presently other currency regimes.
It would be surprising if fixed exchange rates were the answer to a problem that involves more than one objective.
(R. Dornbusch, 1988)
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© 1992 Kumaraswamy Velupillai
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Thonstad, T., Sandelin, B. (1992). Some Observations on the Debate About Stability and Openness. In: Velupillai, K. (eds) Nonlinearities, Disequilibria and Simulation. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-12227-1_13
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DOI: https://doi.org/10.1007/978-1-349-12227-1_13
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