Britain's Trade and Exchange-Rate Policy

1979 ◽  
Vol 90 ◽  
pp. 77-85 ◽  
Author(s):  
R.L. Major

The National Institute has launched a series of conferences on important issues of economic policy. The conference papers and accounts of the conference discussions are being published by Heinemann Educational Books. The first two books in the series, entitled Demand Management and De-industrialisation, were the outcome of conferences held in December 1977 and June 1978 respectively. The third book, of which this article gives a brief summary under the same title, appeared this month, following a conference in June 1979. The purpose of the conference was to provide a forum for discussion of the trade and exchange-rate policies which the United Kingdom should pursue domestically and advocate in the international arena, and the choice of topics reflects the attention recently devoted there to non-tariff barriers to trade, general economic relations between North and South, the European Monetary System, and its differing implications for debtor and creditor countries. Future studies will be conducted under the joint sponsorship of the National Institute, the Policy Studies Institute and the Royal Institute of International Affairs. The first under the new arrangement will take place next month, with ‘Britain in Europe’ as its theme. The series has been started with financial support from the Nuffield Foundation.

2012 ◽  
Vol 03 (03) ◽  
pp. 1250018
Author(s):  
PETER BOFINGER

The discussion on exchange rate policy is dominated by the so-called "impossible trinity". In this paper, a strategy of managed floating is developed that allows one to transform the "impossible trinity" into a "possible trinity". If a central bank targets an exchange rate path which is determined by uncovered interest parity (UIP), it can at the same time set its policy rate autonomously. As a UIP path removes the incentives for carry-trade, it is also compatible with capital mobility. The approach can be used unilaterally to prevent carry trade as a central bank can always prevent an appreciation of its currency. But it can also be applied bilaterally or multilaterally. Successful examples are the European Monetary System and the exchange rate policy of Slovenia before its EMU membership.


1994 ◽  
Vol 14 (3) ◽  
pp. 345-369 ◽  
Author(s):  
James Walsh

ABSTRACTWhen the European Monetary System was negotiated in 1978, governments in France, Britain, and Italy took very different approaches to this new international institution for coordinating exchange rate policies. The French government actively supported the creation of the European Monetary System, the Italian government entered the system but on weaker terms than the French, and the British government refused to enter the system, preferring to allow the pound to float. To explain these different policy choices, I analyze the impact of domestic politics and institutions on exchange rate policy, paying particular attention to how the organization of bank-industry relations and government instability shape policymakers' policy preferences and their abilities to implement these preferences.


Slavic Review ◽  
2021 ◽  
Vol 80 (3) ◽  
pp. 523-543
Author(s):  
Oldřich Krpec ◽  
Vít Hloušek

Czechoslovakia was the first industrialized economy to substantially increase tariffs after the First World War. At that time, Czechoslovakia was highly export-oriented, with a large trade surplus in industrial goods. We argue that the introduction of tariffs was a consequence of the ethnically heterogeneous structure of the economy. German capital controlled the highly export-oriented light and consumer goods industries; Czech capital dominated in industries that were far less export-oriented or even import-competing, such as machinery, transportation equipment, and electrical goods. Trade and exchange-rate policy preferences of both groups clearly differed; however, the policy decision-making process (at least until 1926) was completely controlled by Czechoslovaks and Czech capital, explicitly committed to a nationalist takeover of Czechoslovakia's economy. This is why it was possible to implement an exchange rate and trade policy that ran contrary to theoretical expectations based on the general (national aggregate) indicators of the national economy.


2020 ◽  
Vol 64 (12) ◽  
pp. 33-43
Author(s):  
I. Kudryashova

After four decades of reforms, China has become one of the biggest economies of the world and its exchange rate policy is a key factor in this process. The paper focuses on the conditions that have shaped the directions of China’s exchange rate policy at every stage of its evolution, the measures taken and the results achieved in terms of the policy’s effect on the economic growth and balance of payments. It is shown that active state interference in the exchange market policy in the early stages resulted in the undervalued yuan exchange rate and also encouraged positive dynamics of internal production due to the enhanced national export competitiveness. In subsequent stages, liberalization of China’s economy, its integration in the global economic relations, its bigger contribution to the global product manufacturing and export led to the increased role of market forces in the yuan exchange rate formation. Some practical measures taken in this direction encouraged the balanced yuan exchange rate, lower surplus of current accounts and increase in balance volatility of capital and financial accounts. Currently, the yuan exchange rate is still controlled. China’s monetary authorities mostly use international reserves to regulate the yuan exchange rate. The paper concludes that it is necessary to further increase the influence of market factors in the yuan exchange rate formation and diversification of the yuan stability instruments in order to maintain export growth rates, to develop China’s financial market and to expand the scope and international spheres of the yuan use.


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