Showing papers in "PSL Quarterly Review in 1996"

Free trade: why, when and for whom?

Abstract: The free-trade argument as situated in the normative dimension of orthodox theory had an explicit prescriptive role of expressing that free trade is efficient. Moreover, the factor-price equalisation theorem as framed in the positive dimension of orthodox theory served an implicit prescriptive role stating that free trade is also equitable. As evidenced by the influence of political realities the developments in the international trading system, there has been variation in the application of the free trade doctrine across time. The evolution of economic thinking about free trade is examined. Amongst the important issues explored are the reasons for departure from free trade. The reality of the present pattern of free trade is considered in the light of the Uruguay Round agreement. JEL Codes: F13

Towards ERM2: managing the relationship between the euro and the other currencies of the European Union

Abstract: The Exchange Rate Mechanism 2 (ERM2) framework promises a stronger and closer relationship between the euro and potential non-euro members of the EU. The central factor of the relationship will depend on the progress of the economic convergence of participating countries. ERM2 provides for a suspension of intervention and financing by the European Central Bank (ECB) and non-euro banks during price stabilisation. It clearly indicates an exchange rate objective that is geared towards non-inflationary economic and monetary policies. An examination is undertaken of how best to organise monetary and exchange rate policy cooperation between the euro area and these other EU countries. JEL Codes: F15, E52 Keywords: Foreign Exchange & Reserves Policy, Laws, regulations and rules, Eurocurrency market

Vietnam in the 1980s: price reforms and stabilisation

Abstract: Before the 1980s, Vietnam was modelled as a centrally-planned economy (CPE) along the same lines as the Soviet economy. During the 1980-88 period a kind of 'modified' planned economy (MPE) developed in which some partial reforms were effected within the CPE framework. These reforms and Vietnam's latest plans and reforms are surveyed. Economic reform measures in 1985 focused on the insignificant monetary overhang problem, which involved 'forced' money holdings by households owing to shortages in consumer goods. At the same time, it failed to address the problem of 'flow' of net domestic credit extended to the government and state-owned enterprises. Confiscatory monetary reform aggravated the situation as it reduced the demand for real balances. Budgetary and credit limits and shifts in asset portfolio choices by the Vietnamese, on the other hand, were responsible for the success of the 1989 reforms.