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Real Exchange Rates and economic development

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  • Giersch, Herbert

Abstract

It is the purpose of this paper to correct some of these shortcomings and to lengthen the time horizon in the public debate about exchange rates, notably about the dollar/DM rate. Long-term interest rates, most of all the real rate of interest and the profitability of investment, will be brought into focus. The hypothesis emerging from this paper is that the dollar is likely to remain strong for fundamental reasons, i.e. for reasons rooted in the real sectors of the American and European economies. Temporary declines for short-term reasons are, of course, not excluded. They should, therefore, not be viewed as disproving the central thesis: what matters in the longer run are the vitality of an economy and its place and role in world economic development.

Suggested Citation

  • Giersch, Herbert, 1984. "Real Exchange Rates and economic development," Kiel Working Papers 218, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwkwp:218
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    References listed on IDEAS

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    1. Ricardo, David, 1821. "On the Principles of Political Economy and Taxation," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, edition 3, number ricardo1821.
    2. Dicke, Hugo & Trapp, Peter, 1984. "Zinsen, Gewinne, Nettoinvestitionen: Zu den Bestimmungsfaktoren der Sachvermögensbildung westdeutscher Unternehmen," Kiel Discussion Papers 99, Kiel Institute for the World Economy (IfW Kiel).
    3. Samuelson, Paul A, 1984. "Second Thoughts on Analytical Income Comparisons," Economic Journal, Royal Economic Society, vol. 94(374), pages 267-278, June.
    4. Bela Balassa, 1964. "The Purchasing-Power Parity Doctrine: A Reappraisal," Journal of Political Economy, University of Chicago Press, vol. 72(6), pages 584-584.
    5. Herbert Giersch, 1949. "Economic Union Between Nations and the Location of Industries," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 17(2), pages 87-97.
    6. Mascaro, Angelo & Meltzer, Allan H., 1983. "Long- and short-term interest rates in a risky world," Journal of Monetary Economics, Elsevier, vol. 12(4), pages 485-518, November.
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    Cited by:

    1. Horst Siebert, 1985. "Wirtschaftliche Zwä;nge für offene Volkswirtschaften," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 121(4), pages 609-627, December.
    2. Scheide, Joachim, 1987. "Anstieg und Fall des Dollarkurses - Folgen der amerikanischen Geldpolitik?," Kiel Discussion Papers 131, Kiel Institute for the World Economy (IfW Kiel).
    3. Helmut Reisen & Axel Trotsenburg, 1988. "Should the Asian NICs peg to the yen?," Intereconomics: Review of European Economic Policy, Springer;ZBW - Leibniz Information Centre for Economics;Centre for European Policy Studies (CEPS), vol. 23(4), pages 172-177, July.

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