Abstract
As we have seen, international monetarists argue that the exchange rate is irrelevant in determining the direction of the real economy and affects only monetary phenomena, such as the level of prices. This view was put to a practical test from 1977 to the time of writing (October 1980), when sterling was permitted, if not encouraged, to appreciate almost continuously as a result of the saving to the balance of payments from North Sea oil and of the massive inflow of foreign capital in 1977 and again in 1979–80 to take advantage of high interest rates.
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Notes and References
R. M. Stern, J. Francis and B. Schumacher, Price Elasticities in International Trade, for the Trade Policy Research Centre (London: Macmillan, 1976).
J. R. Artus, ‘The 1967 Devaluation of the Pound Sterling’, IMF Staff Papers Resolution: Global (November 1975).
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P. J. Forsyth and J. A. Kay, ‘The Economic Implications of North Sea Oil Revenues’, Fiscal Studies Resolution: Global (July 1980).
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D. W. Jorgenson and M. Nishimizu, ‘US and Japanese Economic Growth, 1952–74; an International Comparison’, Economic Journal Resolution: Global (December 1978).
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© 1981 Bryan Gould, John Mills and Shaun Stewart
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Gould, B., Mills, J., Stewart, S. (1981). The Exchange Rate. In: Monetarism or Prosperity?. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-16510-0_4
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DOI: https://doi.org/10.1007/978-1-349-16510-0_4
Publisher Name: Palgrave Macmillan, London
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