DP799 | Real and Monetary Aspects of French Exchange Rate Policy Under the Fourth Republic


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This paper studies French exchange rate policy during the 1940s and 1950s from the point of view of two contrasting theories: the theory of collapsing exchange rate regimes and the intertemporal approach to the balance of payments. While the first theory suggests that monetary policy credibility has played a role in French balance of payments crises, the second implies that a more favourable exchange rate should have prevailed, along with more foreign borrowing. The effects of trade controls on growth are also estimated and are found to be negative and significant.