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The impact of the exchange rate system on the effectiveness and implementation of stabilization policy in The Netherlands

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Summary

An economic model is presented with as the most important features a parameter indicating the exchange rate flexibility, the splitting of the internal objective into domestic output and the average price level, the distinction between the price of domestic production and the average price level, and the price indexation of nominal wages. The stability conditions of this model are developed. Based on a qualitative analysis the directions of the impact of policy instruments on objectives are determined and used for obtaining rules and conditions for stable (de)centralized policies under fixed and managed floating exchange rates. These are confronted with empirical results about Dutch adjustment policy.

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Authors and Affiliations

  1. University of Groningen, The Netherlands

    H. Jager (Assistant Professor)

Authors
  1. H. Jager
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Helpful comments from Mr.. W. J. Ferkranus and Prof. S. K. Kuipers are acknowledged.

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Jager, H. The impact of the exchange rate system on the effectiveness and implementation of stabilization policy in The Netherlands. De Economist 127, 143–186 (1979). https://doi.org/10.1007/BF02371735

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  • DOI: https://doi.org/10.1007/BF02371735

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