ABSTRACT
Since commitments to fixed exchange rates were abandoned and the UK decided to float its currency, debates about exchange rate policy. have - almost paradoxically - been continuous. The chapters in this part of the book consider the connections between the exchange rate and macroeconomic policy from the point of view of an individual country. Chapter 9 deals mainly with the role of exchange rate management in securing full employment and balanced trade. Until about ten years ago that was where the analysis usually stopped. The experience of the 1970s demonstrated the general relationship between countries whose currencies were depreciating and countries with high inflation rates. This commonplace observation prompts the question of whether, now. that governments are not bound by the need to maintain by explicit exchange rates, they might exploit this relationship as an anti-inflationary device. Ti1is forms the subject of Chapter 10.
