Mr. Hirsch, who was Senior Advisor in the Fund’s Research Department when this paper was prepared, has now taken up a Research Fellowship at Nuffield College, Oxford.
The parentheses refer in each case to the enumeration of underlying objectives listed earlier.
Article IV, Section 5(a).
Article I, cited above.
International Monetary Fund, The Role of Exchange Rates in the Adjustment of International Payments: A Report by the Executive Directors (Washington, 1970), pp. 47–48 (hereinafter referred to as The Role of Exchange Rates).
The concept of the effective exchange rate was discussed in Fred Hirsch and Use Higgins, “An Indicator of Effective Exchange Rates,” Staff Papers, Vol. XVII (1970), pp. 453–87.
Thus, Italy and Sweden in December 1971 devalued by 1 per cent in terms of gold, revalued by 7½ per cent vis-à-vis the U.S. dollar, and devalued by varying amounts ranging to 9½ per cent against currencies of other industrial countries.
A more extended analytical survey of such proposals has been made by Michael Kuczynski in “Proposals for Small and Perhaps Frequent Changes in Par Values” (unpublished, International Monetary Fund, February 3, 1969).
As indicated in the reference to the concept of fundamental disequilibrium in The Role of Exchange Rates (cited in footnote 3).
Strictly, par value zone, related to the par value in terms of the numeraire. For ease of expression, the concept of parities is used in the sense of par values.
Actually by 3.1 points, as the tolerated limit is now measured from 102. For simplicity, the examples that follow base the calculations on 100.