username2961032
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#1
Report Thread starter 1 year ago
#1
"Evaluate the view that the UK should focus its monetary policy on managing the exchange rate in order to improve macroeconomic performance"

To support my argument, I would state that how managing the exchange rate can improve macroeconomic performance.
For my opposing argument, what would I say?
Instead of managing exchange rates, monetary policy should focus on interest rates etc? or would I simply state why managing the exchange rate is not great?

Thanks for your time
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tmr19
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Both of what you ?'d I agree with. Firstly I'd counteract the positives of ER manipulation (i.e. depends on how much is imported, BoP, inflation, elasticities etc). Then I'd explain that other monetary tools need to be used in conjunction - using a single one such as ER can lead to neglecting of other macroeconomic targets and unintended consequences, then briefly explain some benefits of other tools such as IR. Hope this helped
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