Managing the Dollar: Has the Plaza Agreement Mattered?

Preprint
Publisher Website
Google Scholar
    • preprint
      • Published in RePEc
Abstract
This paper considers whether the Plaza Agreement of September 1985 marked the beginning of a fundamental shift in the exchange-rate policy regime for the United States, the former West Germany, and Japan. The paper uses a simple monetary model of the open economy to illustrate how the exchange rate responses to news about the trade balance when the government authorities gear policy toward resolving external imbalances. The paper finds that U.S. dollars exchange rates against the Japanese yen and the West German mark respond strongly to news about the U.S. trade deficit during the period following the Plaza Agreement but not during the period preceding the Agreement. This evidence, evaluated in the context of the simple model, suggests that the Plaza Agreement marked a significant shift toward more active government management of exchange rates. Copyright 1991 by Ohio State University Press. (This abstract was borrowed from another version of this item.)
All Related Versions

This publication has 0 references indexed in Scilit: