Hostname: page-component-cd9895bd7-lnqnp Total loading time: 0 Render date: 2024-12-22T17:44:34.887Z Has data issue: false hasContentIssue false
  • English
  • Français

The Exchange Rate as a Source of Disturbances: The UK 1979-2000

Published online by Cambridge University Press:  26 March 2020

David Cobham
David Cobham*
Affiliation:
Department of Economics, University of St Andrews
*
e-mail: [email protected]
Get access Rights & Permissions [Opens in a new window]

Abstract

Evidence is presented on the extent to which the possibility for the exchange rate to vary has been useful or unhelpful for UK monetary policy over the last two decades. ‘Large’ exchange rate changes and ‘large’ misalignments are identified, and the thinking and actions of the monetary authorities in response to the level of and changes in the exchange rate in successive monetary regimes are examined. It is argued that the exchange rate has not generally functioned as a useful automatic equilibrating mechanism or as a useful policy instrument; and that in nearly every phase there were movements of the exchange rate, or pressures on it, which for the authorities were unexpected and unwelcome. Thus the exchange rate has typically been a source of extraneous shocks.

Type
Articles
Information
National Institute Economic Review , Volume 181 , July 2002 , pp. 96 - 112
Copyright
Copyright © 2002 National Institute of Economic and Social Research

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

∗

I am grateful to Bill Allen, Peter Andrews, Mike Artis, Charlie Bean, Alex Cobham, Rebecca Driver, Charles Goodhart, Gordon Midgley, Ed Nelson, Kalin Nikolov, Peter Westaway, Simon Wren-Lewis, George Zis and an anonymous referee for comments on an earlier draft, but full responsibility for contents, errors and omissions rests with me.

References

Barisone, G., Driver, R. and Wren-Lewis, S. (2000), ‘Are our FEERs justified?’, Discussion Paper in Economics 00/02, University of Exeter.Google Scholar
Bean, C. (1987), ‘The impact of North Sea oil’, in Dornbusch, R. and Layard, R. (eds), The Performance of the British Economy, Oxford, Oxford University Press.Google Scholar
Britton, A. (1991), Macroeconomic Policy in Britain 1974-87, Cambridge, Cambridge University Press.Google Scholar
Buiter, W. (2000), ‘Optimum currency areas’, Scottish Journal of Political Economy, 47, pp. 213–250.CrossRefGoogle Scholar
Cobham, D. (2002), The Making of Monetary Policy in the UK, 1975-2000, Chichester, Wiley.Google Scholar
Engel, C. (2002), ‘The responsiveness of consumer prices to exchange rates and the implications for exchange-rate policy’, forthcoming, Manchester School.CrossRefGoogle Scholar
Flood, R., and Rose, A. (1999), ‘Understanding exchange rate volatility without the contrivance of macroeconomics’, Economic Journal, 109, pp. F660–F672.CrossRefGoogle Scholar
Funabashi, Y. (1988), Managing the Dollar: From the Plaza to the Louvre, Washington DC, Institute for International Economics.Google Scholar
Keegan, W. (1984), Mrs Thatcher's Economic Experiment, London, Penguin.Google Scholar
Keegan, W. (1989), Mr Lawson's Gamble, London, Hodder &! Stoughton.Google Scholar
Lawson, N. (1992), The View from No. 11, London, Bantam Press.Google Scholar
Mussa, M. (1986), ‘Nominal exchange rate regimes and the behaviour of the real exchange rate’, Carnegie-Rochester Conference Series on Public Policy, 25, pp. 117–124.CrossRefGoogle Scholar
Niehans, J. (1981), ‘The appreciation of sterling - causes, effects, policies’, SSRC Money Study Group Discussion Paper (February 1981).Google Scholar
Obstfeld, M. (2001), ‘International macroeconomics: beyond the Mundell-Fleming model’, National Bureau of Economic Research, Working Paper 8369.CrossRefGoogle Scholar
Smith, D. (1987), The Rise and Fall of Monetarism, London, Penguin.Google Scholar
Spencer, P. (1986), Financial Innovation, Efficiency and Disequilibrium, Oxford, Clarendon Press.Google Scholar
Stephens, P. (1996), Politics and the Pound, London, Macmillan.Google Scholar
Walters, A. (1986), Britain's Economic Renaissance, Oxford, Oxford University Press.Google Scholar