The exchange rate and macroeconomic adjustment
The EMU study by HM Treasury The exchange rate and macroeconomic adjustment considers whether nominal exchange rate flexibility aids macroeconomic adjustment, both in theory and in practice. Focusing on the role of the nominal exchange rate when the economy is away from equilibrium, the study considers how the real exchange rate responds to imbalances between aggregate supply and demand, and the part that real exchange rate movements play in enabling the economy to adjust to unexpected events or shocks. It also considers explanations for the strength of sterling since 1996.
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The exchange rate and macroeconomic adjustment
PDF file of the Executive summary (92kb)
PDF file of Chapters 1-3 (242kb)
PDF file of Chapters 4 and 5 (304kb)
PDF file of Chapter 6 (414kb)
PDF file of Chapter 7 (Conclusions), References and Annexes (133kb)