With the major currencies continuously moving (if not floating freely) against each other, a country that does not choose to float must decide what to peg to. If it pegs to the SDR it floats against all currencies. Thus in the system begun in the early 1970s the very concept of a fixed exchange...

The central hypothesis of this paper is that both the extent and speed of adjustment of the real exchange rate is affected by the way the central bank manages the nominal exchange rate. Specifically, a large discrete adjustment of the nominal exchange rate is more likely to result in fast...

This paper introduces an imported input into a model of art open economy with developed financial markets, a flexible exchange rate, and some degree of market power on the export side. The model is designed to investigate the impact of an increase in imported input prices on the exchange rate,...

This paper examines the impact of the movements in the real exchange rate on employment and output in U.S. manufacturing industries. We use a simple model of supply and demand to estimate the elasticity of manufacturing employment and output with respect to the real exchange rate, at different...

During the decade since 1973, the U.S. economy has become increasingly interdependent with the newly industrializing countries (NICs) among the developing countries. These countries have had high investment ratios to GNP, financed mainly by domestic saving, but also partly by foreign borrowing....

This paper is a chapter in the forthcoming Handbook of International Economics. It surveys the literature on the specification of models of asset markets and the implications of differences in specification for the macroeconomic adjustment process. Builders of portfolio balance models have...

The Economic Recovery Tax Act of 1981 had one aspect that is unusually useful for economic analysis. It provided an example of a clear-cut announcement of future policy actions at specified dates.This provides an opportunity to apply recent advances in the analysis of expectations dynamics to...

In the spring of 1981 the U.S. dollar began a four-year period of real appreciation that took it to a peak of more than 50 percent by first quarter 1985. Since then, the dollar has depreciated substantially, but remains above its 1980 level. During the same period, the Japanese yen first...

This paper derives optimal weights for current-account and reserve indicators for adjusting the exchange rate (a "crawling peg"). Keven (1975)showed that use of a current account indicator alone would not stabi1iereserves, while a reserve indicator results in unstable fluctuations in the...

This paper explores the connections between the shift of world saving toward OPEC and the changing structure of U.S. trade with the non-oil developing countries. The basic point of the paper is that during the 1970s the U.S. economy has become more interdependent through trade with the newly...