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Towards Exchange Rate Stability?
Author(s) -
BUDD ALAN,
DICKS GEOFFREY
Publication year - 1987
Publication title -
economic outlook
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.1
H-Index - 8
eISSN - 1468-0319
pISSN - 0140-489X
DOI - 10.1111/j.1468-0319.1987.tb00364.x
Subject(s) - depreciation (economics) , liberian dollar , economics , inflation (cosmology) , exchange rate , us dollar , rest (music) , monetary economics , interest rate , macroeconomics , finance , economic growth , medicine , physics , cardiology , financial capital , theoretical physics , capital formation , human capital
At their recent meeting in Washington the Group of Seven reafirmed their desire to hold exchange rates at about their current level. In this Viewpoint we consider the prospects for success. We conclude that although current rates are feasible in terms of competitiveness, the system will remain under strain as long as there are major inconsistencies between jiscal policy in the US and the rest of the world. The present conjuncture of interest rates and inflation points to a further dollar depreciation. It would be better, in our view, to enact this quickly and to attempt to stabilize exchange rates at sustainable levels: the policy of holding the dollar is misguided.