摘要:
This thesis examines the decision of Sweden to join the EEC joint currency float in 1973 even though it was and is not a member of the Common Market. The thesis seeks to apply the theory of optimum currency areas to determine the benefits and costs of this decision and its impact on the Swedish economy. A theoretical and empirical analysis of the behavior of Sweden's terms of trade shows that the decision to tie to a larger currency bloc could and did reduce fluctuations in the terms of trade induced by exogenous price and exchange rate movements abroad. The decision to join the joint float also reduces pressure on the exchange rate by reducing short-term capital flows through leads and lags in the balance of payments. The decision to join the joint float means, however, that the Swedish price level cannot vary systematically from the bloc price level. An examination of the Keynesian mechanism for the transmission of inflation under fixed exchange rates reveals that the transmission is fairly rapid and short-run discrepancies between the price levels do not exist very long before inducing either changes in the price levels or changes in the exchange rate. The constraint on the price level in Sweden also implies a constraint on the Swedish government's ability to manipulate the unemployment rate, even in the short run. An examination of the inflation-unemployment tradeoff in Sweden reveals that the long-run Phillips Curve is vertical and the short-run curve is fairly flat. The analysis also reveals that expectations adapt fairly rapidly to changes in the actual rate of inflation. The decision to join the joint float implies a constraint on the level or domestic prices and wages at the long-run rate of unemployment.
摘要:
It is generally accepted that the less developed nations have suffered a long run deterioration of their terms of trade, which represents an indirect transfer of income to the developed nations.1 If true, the gains from international trade are being unequally distributed and the less developed nations have a legitimate complaint. They are very concerned about their terms of trade on the international scene because their trade gains provide for skills required for modernization. Raul Prebisch2 cited the Latin American nations as a classic example in the deterioration of the terms of trade. Most of these nations export heavily in "primary commodities" and spend a large percent of their monies on imports. If these nations maintain a quasi-monopoly position in the marketing of the above items, then the writeer questions whether or not an unfavorable trade relationship does exist.