Real Exchange Rates and economic development
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.
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- Bela Balassa, 1964. "The Purchasing-Power Parity Doctrine: A Reappraisal," Journal of Political Economy, University of Chicago Press, vol. 72, pages 584.
- Samuelson, Paul A, 1984. "Second Thoughts on Analytical Income Comparisons," Economic Journal, Royal Economic Society, vol. 94(374), pages 267-78, June.
- 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.
- Giersch, Herbert, 1979. "Aspects of growth, structural change, and employment: A Schumpeterian perspective," Kiel Working Papers 89, Kiel Institute for the World Economy.
- 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.
- Herbert Giersch, 1979. "Aspects of growth, structural change, and employment A schumpeterian perspective," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 115(4), pages 629-652, December.
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