The Making of Exchange Rate Policy in the 1980s
This paper, written for an NBER conference on "American Economic Policy in the 1980s," discusses the dollar from the standpoint, not of what moved the exchange rate or what policies might have been better, but rather of why the political system adopted the policies that it did. The first half is a chronology of major exchange rate developments during the decade. The second half analyzes the actors and interest groups involved, their views on exchange rate policy, and the system within which they interacted. The strong dollar policy of the first Reagan Administration was less the result of the power of a particular economic ideology or interest group, than it was the result of Treasury Secretary Donald Regan's tenacious defense of the desirability of the side-effects of the President's economic program. The more pragmatic response of his successor, James Baker, to the problems of the trade deficit was to sanction the depreciation of the dollar from 1985 to 1987. But here again, the success of the Plaza strategy was less the result of a skillful and deliberate manipulation of policy tools to satisfy important interest groups, than it was the outcome of a mutually-reinforcing convoy of three bandwagons: bandwagons of the markets, the media, and the makers of policy.
|Date of creation:||Dec 1990|
|Publication status:||published as Feldstein, Martin (ed.) American Economic Policy in the 1980s. Chicago: University of Chicago Press, 1994.|
|Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
Web page: http://www.nber.org
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- Jeffrey D. Sachs, 1985. "The Dollar and the Policy Mix: 1985," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 16(1), pages 117-197.
- Bovenberg, A.L., 1989. "The effects of capital income taxation on international competitiveness and trade flows," Other publications TiSEM e64b6c96-399c-460f-9eff-7, Tilburg University, School of Economics and Management.
- Kathryn Dominguez & Jeffrey A. Frankel, 1991.
"Does foreign exchange intervention matter? disentangling the portfolio and expectations effects for the mark,"
Federal Reserve Bank of San Francisco, issue Nov.
- Dominguez, Kathryn & Frankel, Jeffrey A., 1990. "Does Foreign Exchange Intervention Matter? Disentangling the Portfolio an Expectations Effects for the Mark," Department of Economics, Working Paper Series qt84c522k9, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
- Kathryn M. Dominguez & Jeffrey Frankel, 1990. "Does Foreign Exchange Intervention Matter? Disentangling the Portfolio and Expectations Effects for the Mark," NBER Working Papers 3299, National Bureau of Economic Research, Inc.
- Kathryn Dominguez and Jeffrey A. Frankel., 1990. "Does Foreign Exchange Intervention Matter? Disentangling the Portfolio and Expectations Effects for the Mark," Economics Working Papers 90-133, University of California at Berkeley.
- Jeffrey Sachs, 1985. "The Dollar and the Policy Mix: 1985," NBER Working Papers 1636, National Bureau of Economic Research, Inc.
- McKinnon, Ronald I, 1988. "Monetary and Exchange Rate Policies for International Financial Stability: A Proposal," Journal of Economic Perspectives, American Economic Association, vol. 2(1), pages 83-103, Winter.
- Stanley D Nollen, 1987. "Business Costs and Business Policy for Export Controls," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 18(1), pages 1-18, March.
- Paul R. Krugman, 1985. "Is the strong dollar sustainable?," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 103-155.
- Paul R. Krugman, 1985. "Is the Strong Dollar Sustainable?," NBER Working Papers 1644, National Bureau of Economic Research, Inc.
- Thomas Havrilesky, 1990. "Distributive Conflict And Monetary Policy," Contemporary Economic Policy, Western Economic Association International, vol. 8(2), pages 50-61, 04.
- Bovenberg, A Lans, 1989. "The Effects of Capital Income Taxation on International Competitiveness and Trade Flows," American Economic Review, American Economic Association, vol. 79(5), pages 1045-1064, December.
- Feldstein, Martin S, 1988. "Distinguished Lecture on Economics in Government: Thinking about International Economic Coordination," Journal of Economic Perspectives, American Economic Association, vol. 2(2), pages 3-13, Spring. Full references (including those not matched with items on IDEAS)
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