Abstract
The most notable difference between the US and the UK economies is that the latter is an open economy — indeed its history and circumstances have made the UK more open to external influences than most other countries of a similar size, whereas the USA approximates almost to a figurative closed economy. The interrelationship between domestic monetary developments and the balance of external payments has been close, important and involved in the UK. Moreover, the nature of this relationship has varied, particularly in response to changes in the exchange-rate regime in existence. The change from a regime of pegged, but adjustable, exchange rates — the Bretton Woods system — to a regime of more flexible, but still managed, exchange rates, a change which dates from June 1972 in the UK case, has caused modellers some (continuing) difficulty in adjusting their models to the new system.
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© 1984 C. A. E. Goodhart
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Goodhart, C.A.E. (1984). Money in an Open Economy. In: Monetary Theory and Practice. Palgrave, London. https://doi.org/10.1007/978-1-349-17295-5_9
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DOI: https://doi.org/10.1007/978-1-349-17295-5_9
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