Real Adjustment Processes Under Floating Exchange Rates

This book deals with adjustment problems in economies when exchange rates and terms of trade are flexible. New technologies and new resources lead to changes which are favorable to some and unfavorable to other industries (depending in part on the importcontent of their products) as to the changing environment. Responses of particular firms not only involve prices and outputs, but also new techniques, investments, productlines, and marketing efforts. Public policy responses have in effect recently taken the form of non-tariff barriers, which can have undesired effects. The contributions of this volume deal with adjustment strategies of firms and of public policy. It is shown that capital mobility creates instability problems, but also eases the adjustment to new situations.