The Exchange Rate

  • Bryan Gould
  • John Mills
  • Shaun Stewart


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.


Exchange Rate World Trade Real Exchange Rate Real Wage Trading Performance 
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Notes and References

  1. 3.
    R. M. Stern, J. Francis and B. Schumacher, Price Elasticities in International Trade, for the Trade Policy Research Centre (London: Macmillan, 1976).CrossRefGoogle Scholar
  2. 5.
    J. R. Artus, ‘The 1967 Devaluation of the Pound Sterling’, IMF Staff Papers Resolution: Global (November 1975).Google Scholar
  3. 7.
    D. Ricardo, ‘Notes on Malthus’ in Principles of Political Economy, ed. J. H. Hollanderand T. E. Gregory Resolution: Global (Baltimore, 1928).Google Scholar
  4. 10.
    W. Godley, ‘Large Scale Devaluation is not the Answer’, The Times, 18 July Resolution: Global 1977.Google Scholar
  5. 12.
    P. J. Forsyth and J. A. Kay, ‘The Economic Implications of North Sea Oil Revenues’, Fiscal Studies Resolution: Global (July 1980).Google Scholar
  6. 13.
    S. Stewart, ‘The International Competitiveness of Sterling and the UK Exchange Rate a Note’, Journal of Economic Studies Resolution: Global (November 1976).Google Scholar
  7. 14.
    Samuel Brittan, ’sterling and the Dutch Disease’, Financial Times, 28 April 1977 and’ What the Dutch Do About Their Disease’, Financial Times, 19 April Resolution: Global 1979.Google Scholar
  8. 20.
    D. W. Jorgenson and M. Nishimizu, ‘US and Japanese Economic Growth, 1952–74; an International Comparison’, Economic Journal Resolution: Global (December 1978).Google Scholar

Copyright information

© Bryan Gould, John Mills and Shaun Stewart 1981

Authors and Affiliations

  • Bryan Gould
  • John Mills
  • Shaun Stewart

There are no affiliations available

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