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Chapter II. The World Economy

Published online by Cambridge University Press:  26 March 2020

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Extract

The world economic scene has changed little since May. Devaluation of the franc, which had seemed likely for more than a year, is now an accomplished fact. Otherwise the scene remains dominated, as it has been throughout 1969, by the widespread expectation of an upward revaluation of the deutschemark after next month's elections in West Germany and by the struggle in the United States to control inflation by monetary means. A forecast of the immediate future of the deutschemark now calls, however, for political rather than economic judgement. Similarly in France much will depend upon the rigour of deflationary measures to be introduced by the government and upon the reactions which they may evoke from the trades unions and their members. In this issue, therefore, we direct our main attention to prospects in the United States, where it is at least reasonably clear what aims the authorities will be pursuing in coming months.

Type
Research Article
Information
National Institute Economic Review , Volume 49 , August 1969 , pp. 18 - 32
Copyright
Copyright © 1969 National Institute of Economic and Social Research

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References

note (1) page 20 OECD. Economic Outlook, July 1969, page 14.

note (2) page 20 Welt Konjunktur Dienst no. 2, June 1969, Verlag Welt archiv GMBH, Hamburg.

note (1) page 22 See footnote to chart 1.

note (1) page 24 T. J. Baker, Quarterly Economic Commentary, The Economic and Social Research Institute, May 1969.

note (1) page 26 The implications for trade of the French devaluation are discussed separately at the end of this Chapter.

note (1) page 28 On the liquidity basis, with changes in unofficial dollar balances treated as financing items (see National Institute Economic Review no. 33, August 1965, pages 33-4) there were large deficits. In terms of table 7 the current balance is made up of the balance on goods and services, remittances and pensions, and Government grants.

note (2) page 28 OECD, Economic Outlook, July 1969, page 54.

note (1) page 30 The devaluation was initially brought about by a levy/ subsidy system, which did not apply to all visible trade. It was formalised in June 1958.

note (2) page 30 World trade in manufactures is here defined as in Statistical Appendix table 23. That is to say it covers the exports in sections 5-8 of the Standard International Trade Classification from Canada, the United States, Japan, Belgium-Luxemburg, France, West Germany, Italy, the Netherlands, Sweden, Switzerland, and the United Kingdom (other than ‘special’ category exports of military equipment, etc. from the United States). The calculation is, of course, a very crude one (of which the aim is merely to suggest possible orders of magnitude).

note (3) page 30 For this purpose 1965-67 trade figures were used. It is in fact probable that the effect on the different commodity groups will vary considerably, but any error on this account is likely to be unimportant in terms of the aggregate effect on British exports, which depends much more on area distribution.

note (1) page 32 See R. L. Major, The competitiveness of exports since devaluation’, National Institute Economic Review no. 48, May 1969, page 32; and National Institute Economic Review no. 47, February 1969, pages 14-18.