IDEAS home Printed from https://ideas.repec.org/a/pal/imfstp/v30y1983i1p75-112.html
   My bibliography  Save this article

Exchange Rate Regimes and European-U.S. Policy Interdependence [with Comments] (Régimes de taux de change et interdépendance des politiques économiques en Europe et aux Etats-Unis) (Régimen cambiario e interdependencia europeo-estadounidense en cuanto a sus medidas de política)

Author

Listed:
  • Alexander K. Swoboda

    (International Monetary Fund)

  • Jacob A. Frenkel

    (International Monetary Fund)

  • Jacques R. Artus

    (International Monetary Fund)

Abstract

This article documents and contrasts the degree of interdependence of key macroeconomic variables across six major industrial economies (the United States, Canada, Japan, France, the Federal Republic of Germany, and the United Kingdom) over the periods 1960-71 and 1974-82. Principal components analysis is the main statistical tool employed. The findings suggest that, although trend inflation rates have indeed become more independent since the adoption of floating exchange rates, short-run (quarterly) changes in inflation, interest rates, and, especially, changes in real output growth have become significantly more interdependent in the later period. This finding holds not only for the original time series studied but also for innovations (unexpected shocks) in these series. In contrast, no very clear difference in the interdependence of policy instruments across countries appears when the two periods are compared. The evidence lends some support to the notion of a world business cycle, on which national business cycles are superimposed and which is independent of the exchange rate regime, although the channels of transmission differ depending on the prevailing regime. In addition, a weak regional (European) pattern of interdependence appears in the data. The paper concludes with a discussion of some implications for the choice of exchange rate regime, regional currency arrangements, and the scope for autonomy of macroeconomic policy under floating. It emphasizes the importance of credibility and precommitment of policies and concludes that flexible exchange rates, to work properly, require a set of rules that, although different from those that would apply under fixed rates, are no less constraining for national macroeconomic policies. /// A partir de données statistiques, le présent article compare le degré d'interdépendance des principales variables macroéconomiques entre six grands pays industrialisés (Etats-Unis, Canada, Japon, France, République fédérale d'Allemagne et Royaume-Uni) pendant deux périodes: 1960-71 et 1974-82. L'analyse en composantes principales est le principal outil statistique utilisé. Les résultats indiquent que si les taux tendanciels d'inflation sont effectivement devenus plus indépendants depuis l'adoption des taux de change flottants, les variations à court terme (trimestrielles) de l'inflation et des taux d'intérêt et surtout, les variations de croissance de la production réelle sont devenues nettement plus interdépendantes pendant la deuxième période. Cette constatation vaut non seulement pour les séries chronologiques initiales étudiées, mais aussi pour les éléments nouveaux (chocs imprévus) dans ces séries. En revanche, une comparaison entre les deux périodes ne fait apparaître aucune différence très nette quant à l'interdépendance des instruments de politique économique entre ces pays. Les résultats appuient l'idée qu'il existe un cycle économique mondial auquel se superposent les cycles nationaux, et qui est indépendant du régime de change, encore que les voies de transmission de ses effets diffèrent selon le régime en vigueur. En outre, les données mettent en évidence un schéma régional (européen) d'interdépendance assez peu prononcé. Dans la dernière section de l'article, l'auteur examine certaines implications de ses conclusions pour le choix d'un régime de change, les accords monétaires régionaux et l'autonomie des politiques macroéconomiques en régime de taux de change flottants. Il souligne l'importance de la crédibilité et de l'engagement préalable en politique économique et conclut que les taux de change flexibles exigent, pour fonctionner convenablement, un ensemble de règles qui, si elles diffèrent de celles applicables en régime de taux de change fixes, n'en sont pas moins contraignantes pour les politiques macroéconomiques nationales. /// En este artículo se documenta y compara el grado de interdependencia de las principales variables macroeconómicas de las seis economías industriales principales (Estados Unidos, Canadá, Japón, Francia, República Federal de Alemania y Reino Unido) en los períodos 1960-71 y 1974-82. El análisis de los componentes principales es el instrumento estadístico primordialmente empleado en este trabajo. Las conclusiones indican que, si bien las tasas de inflación básicas se han hecho más independientes a partir de la adopción de tipos de cambio flotantes, las variaciones a corto plazo (trimestrales) de la inflación, de los tipos de interés y, sobre todo, del crecimiento del producto real, se han hecho mucho más interdependientes en los últimos tiempos. Se llega a esta conclusión no sólo en el caso de las series cronológicas originales estudiadas, sino también en el de innovaciones (choques inesperados) de dichas series. En cambio, cuando se comparan los dos períodos no aparece una diferencia muy clara en la interdependencia de los instrumentos de política en los distintos países. Los datos corroboran en cierta medida la noción de un ciclo económico mundial al cual se superponen los ciclos económicos nacionales y que es independiente del régimen cambiario, aunque los mecanismos de transmisión difieran de un régimen a otro. Además, aparece en los datos una tenue interdependencia regional (europea). Concluye el artículo con un examen de algunas de las consecuencias en cuanto a la selección de un régimen cambiario, de regímenes monetarios regionales y el ámbito de autonomía de la política macroeconómica en un régimen de flotación. Se hace hincapié en la importancia de la credibilidad y la determinación previa de las políticas y se llega a la conclusión de que los tipos de cambio flexibles requieren, para funcionar adecuadamente, un conjunto de normas que, si bien han de ser diferentes de las que se aplicarían en un contexto de tipos de cambio fijos, no son por ello menos restrictivas en lo que a las políticas macroeconómicas se refiere.

Suggested Citation

  • Alexander K. Swoboda & Jacob A. Frenkel & Jacques R. Artus, 1983. "Exchange Rate Regimes and European-U.S. Policy Interdependence [with Comments] (Régimes de taux de change et interdépendance des politiques économiques en Europe et aux Etats-Unis) (Régimen cambia," IMF Staff Papers, Palgrave Macmillan, vol. 30(1), pages 75-112, March.
  • Handle: RePEc:pal:imfstp:v:30:y:1983:i:1:p:75-112
    as

    Download full text from publisher

    File URL: http://www.jstor.org/stable/3866876?origin=pubexport
    File Function: main text
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Guillermo A. Calvo & Leonardo Leiderman & Carmen M. Reinhart, 1994. "Capital Inflows to Latin America: The 1970s and 1990s," International Economic Association Series, in: Edmar L. Bacha (ed.), Economics in a Changing World, chapter 6, pages 123-148, Palgrave Macmillan.
    2. Reinhart, Carmen & Calvo, Guillermo & Leiderman, Leonardo, 1992. "Capital Inflows and Real Exchange Rate Appreciation in Latin America," MPRA Paper 13843, University Library of Munich, Germany.
    3. Reinhart, Carmen & Calvo, Guillermo & Leiderman, Leonardo, 1994. "Capital Inflows to Latin America: The 1970s and 1990s," MPRA Paper 8196, University Library of Munich, Germany.
    4. Fels, Joachim, 1990. "Flexible exchange rates and insulation: A reexamination," Kiel Working Papers 444, Kiel Institute for the World Economy (IfW Kiel).
    5. Selover, David D. & Round, David K., 1996. "Business cycle transmission and interdependence between Japan and Australia," Journal of Asian Economics, Elsevier, vol. 7(4), pages 569-602.
    6. Guillermo A. Calvo & Leonardo Leiderman & Carmen M. Reinhart, 1993. "Capital Inflows and Real Exchange Rate Appreciation in Latin America: The Role of External Factors," IMF Staff Papers, Palgrave Macmillan, vol. 40(1), pages 108-151, March.
    7. Dibooglu, Selahattin, 1998. "The incidence and effects of macroeconomic disturbances under alternative exchange rate systems: evidence since the classical gold standard," International Review of Economics & Finance, Elsevier, vol. 7(2), pages 225-241.
    8. Selover, David D., 2004. "International co-movements and business cycle transmission between Korea and Japan," Journal of the Japanese and International Economies, Elsevier, vol. 18(1), pages 57-83, March.
    9. Selover, David D., 1997. "Business cycle transmission between the United States and Japan: A vector error correction approach," Japan and the World Economy, Elsevier, vol. 9(3), pages 385-411, August.
    10. Kim, Jongwoo, 2000. "The relationship between the monetary regime and output volatility: a multivariate GARCH-M model of the Japanese experience, 1919-1996," Japan and the World Economy, Elsevier, vol. 12(1), pages 49-69, January.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pal:imfstp:v:30:y:1983:i:1:p:75-112. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.palgrave-journals.com/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.