Effects of U.S. Monetary Restraint on the DM-$ Exchange Rate and the German Economy
AbstractThis paper assesses the quantitative effects of a shift to monetary restraint in the United States on the DM-$ exchange rate and the German economy. The results indicate that such effects are large. If Germany keeps its money growth unchanged, it will tend to experience a sharp and sustained depreciation of the deutsche mark and a significant increase in inflation and in unemployment. If it adopts an equivalent policy of monetary restraint, it will tend to benefit from a marked decline in inflation, but the cost in terms of lost output is extremely large.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 0926.
Date of creation: Jul 1982
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