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- Title
Domestic Economic Policy and Convertibility.
- Authors
McCracken, Paul W.
- Abstract
This section examines the relationship between the requirements of domestic economic policy and currency convertibility in the U.S. In any head-on conflict between the requirements of domestic economic policy and convertibility of the dollar, it is safe to predict that convertibility will come off second best. That simply reflects a fact of life in the modern world that no government will sacrifice its domestic economic aspirations in any major way for external reasons. That has come to be as true for the U.S. as for other nations. The problem cannot, however, be disposed of quite that simply because the single-minded pursuit of domestic policies by major nations would lead to an international economic and political order that would also place domestic objectives in jeopardy. Yet a discussion of convertibility without reference to other aspects of the international economic and financial system is impossible. While it is difficult to see any such system that does not envisage convertibility of the dollar in some form, as the Chairman of the Federal Reserve Board has himself observed, it is also clear that the responsibilities of convertibility should not be assumed until the systemic environment gives reasonable assurance that the obligations of convertibility can be discharged.
- Subjects
UNITED States; ECONOMIC policy; CURRENCY convertibility; ECONOMIC reform; FOREIGN exchange; COUNTERTRADE
- Publication
American Economic Review, 1973, Vol 63, Issue 2, p199
- ISSN
0002-8282
- Publication type
Article