Year: 1987
Type: report
Abstract: The problem which Swedish economists faced and tried to solve at the end of World War I was clearly shown by the monetary situation in Sweden at that time.The country was experiencing internal inflation accompanied with overvaluation of the currency with respect both to the pound and to to the dollar.The brand-new tool for explaining exchange rates movements under an incorvertible paper standard regime was the purchasing power.parity,which, neverthless, will fit much better the explanation of the German Inflation than the Swedish one.To solve this riddle was a challenge which almost all Swedish economists accepted.Of course the main actors in the story were G.Cassel and K.Wicksell.Although they took the gold standard regime as starting point, both Cassel and Wicksell tried explain the working of a free currency system and to look for a theory of exchange rate determination under such new conditions.While Cassel attempted to fit data from the first years of the war in a new theory wnich was based on the same principle as the old one , purchasing power parity (ppp) instead of gold parity, Wicksell proceeded in the opposite way: he set up two extremely simplified abstract models of exchange rate determination and stated that the reality was to
Author: Domenica Tropeano
Language: English
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2933061888