Abstract
The central lesson from the Bretton Woods system of fixed parities was that there is a unique relation of the domestic price level (wage rate and interest rate) to the price level (wage rate and interest rate) in the rest of the world that is consistent with balance of payments equilibrium and full employment. Simply said, countries can simultaneously enjoy full employment and balance of payments equilibrium if they adjust parities to reflect divergences in economic policies or if they coordinate economic policies (a unique real exchange rate) while maintaining fixed nominal parities.1
This is a preview of subscription content, log in via an institution.
Buying options
Tax calculation will be finalised at checkout
Purchases are for personal use only
Learn about institutional subscriptionsPreview
Unable to display preview. Download preview PDF.
References
Al-Aitani, Muhammad, “An Empirical Investigation into the Appropriate Exchange Rate Arrangement for the Gulf Cooperation Council States,” Ph.D. Thesis, George Washington University, Washington D.C., December 1995.
Allechi, M’Bet and NiamKey, Madeleine, “Evaluating the Net Gains from the CFA Franc Zone Membership: A Different Perspective,” World Development, vol. 22, No. 8, 1994.
Askari, H. Saudi Arabia’s Economy: oil and the search for Economic Development, forward by Robert Solow and Appendix by Martin Weitzeman, JAI Press: Greenwich, Connecticut 1990, and H. Askari, V. Nowshirvani, and M. Jabber, Regional Economic Development in the GCC. unpublished manuscript 1996.
Clément, Jean A. P., Johannes Mueller, Stephanie Cossé and Jean Le Dem, “Aftermath of the CFA France Devaluation,” Occasional paper #138, IMF, May 1996.
Commission of the European Communities, Annual Report for 1995.
Devarajan, S. and DeMelo, J., “Membership in the CFA Zone: Odyssean Journey or Trojan Horse,” Paper presented at the Conference on African Economic Issues. Nairobi, 1990.
IMF, World Economic Outlook, October 1995.
Modigliani, Franco and Askari, Hossein, “The Reform of The International Payments System,” Essays in International Finance, Princeton University, No. 89, September 1971.
Modigliani, Franco, “The shameful rate of unemployment in the EMS: causes and cures,” De Economist 144, No. 3, 1996.
Progress Towards Convergence, EMI, November 1995.
Author information
Authors and Affiliations
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 1998 Springer Science+Business Media New York
About this chapter
Cite this chapter
Modigliani, F., Askari, H. (1998). Exchange Rate And Economic Policy In Three Regional Blocks: The EU, The GCC And The CFA. In: Rehman, S.S. (eds) Financial Crisis Management in Regional Blocs. Springer, Dordrecht. https://doi.org/10.1007/978-94-011-4864-1_8
Download citation
DOI: https://doi.org/10.1007/978-94-011-4864-1_8
Publisher Name: Springer, Dordrecht
Print ISBN: 978-94-010-6038-7
Online ISBN: 978-94-011-4864-1
eBook Packages: Springer Book Archive