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Exchange rates and the macroeconomy in an era of global financial crises, with special reference to Australia

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  • Peter Kriesler
  • J W Nevile
  • G C Harcourt

Abstract

Unless the global financial system is radically reformed – and the necessary reforms are looking increasingly unlikely to occur – it will continue to be conducive to financial crises. Government rhetoric and actions can often influence in desirable ways both the speculative actions that now determine the exchange rate and the effect of exchange rate movements on the domestic economy. Managing the exchange rate should start with Australian support for measures such as the Tobin tax that dampen speculation. In 2008 and 2009, exchange rate changes were helpful in reducing the impact of the global financial crisis on Australia, largely because of a very clear commitment by the Australian government to make preservation of jobs its top priority. In 2009, a rapid rise in the exchange rate was unhelpful. In the short run, little can be done about this, but in the longer run, it is possible to offset the adverse effects.

Suggested Citation

  • Peter Kriesler & J W Nevile & G C Harcourt, 2013. "Exchange rates and the macroeconomy in an era of global financial crises, with special reference to Australia," The Economic and Labour Relations Review, , vol. 24(1), pages 51-63, March.
    • Handle: RePEc:sae:ecolab:v:24:y:2013:i:1:p:51-63
    DOI: 10.1177/1035304612474212
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    References listed on IDEAS

    as
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    Cited by:

    1. Oyinbo, O. & Rekwot, G. Z., 2014. "Econometric Analysis of the Nexus of Exchange Rate Deregulation and Agricultural Share of Gross Domestic Product in Nigeria," AGRIS on-line Papers in Economics and Informatics, Czech University of Life Sciences Prague, Faculty of Economics and Management, vol. 6(1), pages 1-7.

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    More about this item

    Keywords

    Exchange rates; global financial system; macroeconomic policy; speculation; Tobin tax;
    All these keywords.

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • F30 - International Economics - - International Finance - - - General
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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