keynesian Reform: kaldor's Radical critique and the Exchange-Rate
Among the 'what if?' projections from the 1972 version of the London Business School model was one that addressed the question of what would have happened had there been no sterling devaluation in 1967. This was unusual in being historically specific -a counterfactual - but its real interest here is that it marked the arrival of the exchange-rate as an instrument whose effect could be represented within a macroeconometric model. The importance of this event comes from the fact that the exchange rate and its use as an instrument of policy have been at the very centre of almost every major policy debate and economic crisis in the UK for the past quarter-century from the 1967 devaluation onwards.