Showing papers in "National Institute Economic Review in 1977"
TL;DR: This article found no evidence that exchange rate expectations are a strong influence on traders' choice of currency, except for the decline in the use of sterling's use as an international currency as an alternative currency.
Abstract: Almost all trade among industrial countries is now invoiced in the currency of one of the trading partners, normally that of the exporter. Use of a 'third country currency' (normally the dollar) is important only in trade with developing countries. Except for the decline in sterling's use as an international currency, there is no evidence that exchange rate expectations are a strong influence on traders' choice of currency.
53 citations
TL;DR: The authors traces the course of world commodity prices back to the middle of the 19th century and attempts to assess the changes in their purchasing value by deflating them by the export prices of manufactured goods.
Abstract: This article traces the course of world commodity prices back to the middle of the 19th century and attempts to assess the changes in their purchasing value by deflating them by the export prices of manufactured goods. The purchasing power of commodity prices was in decline over long periods but they usually regained their earlier real value, or improved on it, in powerful upsurges of which the 1972-74 boom was the most recent; it was also unique in peacetime and, though with fluctuations, the purchasing value of commodities has since remained at a relatively high level.
11 citations
TL;DR: In this paper, the authors present two models of sterling exchange rates, for which the starting-point is Cassel's synthesis of the purchasing power parity and the asset demand theory of exchange rate determination.
Abstract: This article presents two models of sterling exchange rates, for which the starting-point is Cassel's synthesis of the purchasing power parity and the asset demand theory of exchange rate determination. The first model generates estimates of equilibrium exchange rates in 1970; the second is designed to explain subsequent monthly deviations of actual rates from these notional 1970 rates and so to provide a system for short-term forecasting of 'effective' exchange rates in terms of variables defined in the National Institute's larger model of the economy. Monthly forecasting equations for other major currencies are also estimated and the predictive power of the monthly model is tested—with encouraging results—over the period May-November 1976.
6 citations
TL;DR: In this paper, the authors consider the impact of changes in the exchange rate on the balance of payments and government revenue in the United Kingdom and show that the former is improved relative to the pre-oil price rise position, but significantly compared with either the present balance or that of other industrial countries.
Abstract: Oil and gas from the North Sea will make the United Kingdom a net exporter of energy in the 1980s and supply a substantial portion of its needs through the 1990s. In value terms, the benefits are principally to the balance of payments and government revenue. The former is improved slightly relative to the pre-oil price rise position, but significantly compared with either the present balance or that of other industrial countries. The absolute size of these benefits and the share of the government in the total are extremely sensitive to the assumptions made about changes in the exchange rate, including those which result from the improvement in the balance of payments. Many decisions about the distribution of the benefits are already being taken, for example in policies for the energy sector and the exchange rate. It is therefore too late to plan to allocate all the benefits to a single purpose, and it may be undesirable to do so.
4 citations
TL;DR: The authors traces the course of the price of crude oil back to 1880 and attempts to assess the changes in its purchasing value by deflating it by the export prices of manufactured goods.
Abstract: This note traces the course of the price of crude oil back to 1880 and attempts to assess the changes in its purchasing value by deflating it by the export prices of manufactured goods. The purchasing power of the posted price of crude oil declined through the 1960s, even without allowance for significant discounts, and then trebled in 1974. The sixfold nominal rise of the oil price from 1972 to 1977 compares with a 150 per cent increase in the prices of other primary products, and a rise of about 75 per cent in the price level of manufactured goods in world trade.
4 citations
TL;DR: The earnings of manual workers in the public and private sectors for the years 1970-77 are examined in this article, and the marked improvement in the relative pay of public sector workers which had been noted in earlier work is confirmed.
Abstract: The earnings of manual workers in the public and private sectors for the years 1970-77 are examined. The marked improvement in the relative pay of public sector workers which had been noted in earlier work is confirmed. It is found that in the period from 1970 to 1976 the relative pay of the public sector improved by over 10 per cent. In 1977 there was a movement back in favour of the private sector of about 2 1/2 per cent, but this still left the relative pay of public sector manual workers 10 per cent higher than in the 1950s and 1960s.
3 citations
TL;DR: In this article, the authors have published papers about the characteristics of their formal model and about particular equations, but little about the rather flexible way in which the model is actually used to produce a forecast.
Abstract: The construction of an economic forecast involves a blend of the use of a set of formal equations summarising to the best of the model-builders' ability the dominant characteristics of the past behaviour of the economy, together with a complex set of judgements about the way in which these equations have recently behaved and are likely to behave over the forecast period. We, in common with other forecasters, have published papers about the characteristics of our formal model and about particular equations, but little about the rather flexible way in which the model is actually used to produce a forecast. This Note is an attempt to redress the balance somewhat. It is also intended as an explanatory note to the table of residual adjustments which, beginning with this issue of the Review (see p. 19), we intend to publish regularly as part of the background to our quarterly forecasts.
2 citations